THE EFFECT OF FIDESZ FAMILY POLICY AND SOCIOECONOMIC FACTORS ON FERTILITY IN HUNGARY James R. Hepburn A thesis submitted to the faculty at the University of North Carolina at Chapel Hill in partial fulfillment of the requirements for the degree of Master of Arts in the Department of Global Studies (Russian, Eurasian, and East European Studies Concentration) in the College of Arts and Sciences. Chapel Hill 2020 Approved by: Klara Sabirianova Peter Graeme B. Robertson Boone A. Turchi © 2020 James R. Hepburn ALL RIGHTS RESERVED ii ABSTRACT James R. Hepburn: The Effect of Fidesz Family Policy and Socioeconomic Factors on Fertility in Hungary (Under the direction of Klara Peter) This study evaluates the impact of expansions to family policy by the political party Fidesz on fertility in Hungary since 2010 and tests the effects of key socioeconomic and cultural characteristics on fertility in Central and Eastern Europe. To do so, we estimate difference in differences linear regression and Probit models for the recent birth of a child in households in 10 Central and Eastern European countries from 2002-18, and a Poisson model for the number of children given birth to by women in a subsample of these countries for 2006 and 2018. We introduce a partial theory of choice that provides an exhaustive set of mutually exclusive ways a person can choose to have a child to develop novel hypotheses. We find the policies modestly increased fertility initially but later had no significant effect, and that Roman Catholic, more traditional and less pleasure-seeking individuals tended to have more children. iii ACKNOWLEDGEMENTS I thank Dr. Klara Peter for taking confidence in my abilities and her willingness to advise me with this thesis despite the fact that I had not studied statistics or econometrics when approaching her in April of 2019. I especially appreciate Dr. Peter’s patience and generous dedication of time in instructing me on more elemental matters that a student of economics would have already known. I also thank Dr. Graeme Robertson who from my first course with him encouraged me to direct my focus in research to the practical significance and empirical side of a problem when the topic and project demands it while integrating my instinct to investigate its philosophical and theoretical aspects into the process. iv TABLE OF CONTENTS LIST OF FIGURES ................................................................................................................................ VII LIST OF TABLES ................................................................................................................................ VIII LIST OF ABBREVIATIONS AND SYMBOLS ................................................................................ IX CHAPTER 1: INTRODUCTION .............................................................................................................1 CHAPTER 2: FERTILITY TRENDS IN HUNGARY AND EASTERN EUROPE ........................6 SINCE 1960 CHAPTER 3: DEVELOPMENT OF FAMILY POLICY IN HUNGARY ..................................... 11 3.1 ALLOWANCES AND TAX BENEFITS ....................................................................................... 12 3.2 LABOR MARKET BENEFITS .................................................................................................. 16 3.3 HOUSING AND TRANSPORTATION BENEFITS ........................................................................ 16 3.4 CHILDCARE AND EARLY EDUCATION SERVICES ................................................................... 18 CHAPTER 4: LITERATURE REVIEW .............................................................................................. 20 CHAPTER 5: THEORY OF CHOICE ................................................................................................. 22 CHAPTER 6: HYPOTHESES ............................................................................................................... 30 6.1 DETERMINATION OF CAUSAL LINKS OF INTEREST ................................................................ 30 6.2 THE EFFECT OF FIDESZ FAMILY POLICY ON FERTILITY ........................................................ 33 6.3 SOCIOECONOMIC AND CULTURAL DETERMINANTS .............................................................. 41 v CHAPTER 7: DATA AND SAMPLE .................................................................................................. 46 7.1 THE EUROPEAN SOCIAL SURVEY ......................................................................................... 46 7.2 MEASURES OF FERTILITY ..................................................................................................... 46 7.3 EXPLANATORY VARIABLES AND SAMPLES OF ANALYSIS ..................................................... 48 CHAPTER 8: STATISTICAL ANALYSIS ......................................................................................... 55 8.1 MODELS FOR HOUSEHOLDS.................................................................................................. 55 8.2 ESTIMATES OF MODELS AT HOUSEHOLD LEVEL .................................................................. 57 8.3 MODEL AT THE INDIVIDUAL LEVEL...................................................................................... 61 8.4 ESTIMATE OF MODEL AT THE INDIVIDUAL LEVEL ................................................................ 62 CHAPTER 9: CONCLUSION AND POLICY IMPLICATIONS.................................................... 66 APPENDIX 1: DEFINED VARIABLES ............................................................................................. 69 APPENDIX 2: COMPILATION OF EUROPEAN SOCIAL SURVEY DATA ......................... 71 BIBLIOGRAPHY ......................................................................................................................... 79 vi LIST OF FIGURES FIGURE 1: TOTAL FERTILITY RATE, HUNGARY AND REGIONAL AVERAGES ..................................... 7 FIGURE 2: AGE-SPECIFIC FERTILITY RATES ACROSS THE FERTILE CAREER FOR................................. 8 HUNGARY AND V4 BY DECADE FIGURE 3: MEAN AGE OF WOMEN AT BIRTH OF FIRST CHILD, HUNGARY AND ................................. 10 REGIONAL AVERAGES FIGURE 4: THE TYPES OF DESIRE FOR AN OBJECT ........................................................................... 29 FIGURE 5: THE WAYS A CHOICE CAN REALIZE SOMETHING............................................................. 33 vii LIST OF TABLES TABLE 1: SUMMARY STATISTICS FOR HOUSEHOLD SAMPLE .......................................................... 52 TABLE 2: SUMMARY STATISTICS FOR SAMPLE OF FEMALES .......................................................... 53 TABLE 3: ESTIMATIONS OF MULTIVARIATE AND PROBIT MODELS ON HOUSEHOLDS ..................... 57 TABLE 4: AVERAGE PARTIAL AND MARGINAL EFFECTS OF TREATMENT, ...................................... 60 ROUND YEAR AND THEIR INTERACTION TABLE 5: ESTIMATION OF POISSON MODEL ON FEMALES .............................................................. 62 TABLE 6: AVERAGE PARTIAL EFFECT OF TREATMENT, PERIOD AND THEIR INTERACTION ............. 64 TABLE 7: INCIDENCE-RATE RATIO OF HUNGARY POST-ANTE ......................................................... 65 TABLE 8: VARIABLES IN STATA ..................................................................................................... 75 viii LIST OF ABBREVIATIONS AND SYMBOLS ANYT Anyasági Támogatás or Maternity Grant CSAP Családi Pótlék or Family Allowance CSED Csecsemőgondozási Díj or Infant Care Allowance CSOK Családi Otthonteremtési Kedvezmény or Family Home Creation Subsidy GYED Gyermekgondozási Díj or Childcare Allowance GYES 1967-2015, Gyermekgondozási Segély; 2016-, Gyermekgondozást Segitő Ellátás or Childcare Benefit; Childcare Support Provision, respectively GYET Gyermeknevelési Támogatás or Childrearing Support TGYÁS Terhességi-Gyermekágyi Segély or Pregnancy and Confinement Benefit → Material conditional of classical logic. Binary logical operator of two propositions 푝 and 푞 such that 푝 → 푞 is true if and only if 푝 is false or 푞 is true. ⟹ To bring about or to realize. Binary logical operator of two propositions 푝 and 푞 such that 푝 ⟹ 푞 is true if and only if 푝 produces or is a minimal sufficient condition for 푞 coming to be, where "sufficient" means 푝 on its own makes 푞 come to be, and "minimal" means that no tautologous consequence 푟 of 푝 that does not conversely tautologously imply 푝 makes 푞 come to be on its own. The terms "cause" or "to cause" are defined following J.L. Mackie (1965) as an insufficient but necessary part of an unnecessary but sufficient condition of a result called its "effect", or is merely the concatenation of all these parts that form a minimal sufficient condition. Thus 푝 is the concatenation of all these smaller causes forming a sufficient condition, and is also a cause in the second sense, of 푞 when 푝 ⟹ 푞. ∧ Concatenation of classical logic. Binary logical operator of two propositions 푝 and 푞 such that 푝 ∧ 푞 is true if and only if both 푝 and 푞 are true. ¬ Negation of classical logic. Unary logical operator of one proposition 푝 such that ¬푝 is true if and only if 푝 is false. ∃ "There exists…such that" or existential quantifier of first-order logic. Takes a variable 푥 and some logical predicate 휙 with 푥 present and unbound or not, translating as "There exists some 푥 such that 휙". For example, when 휙(푥) is "푥 is a parent", ∃푥 휙(푥) translates as "there exists some 푥 such that 푥 is a parent. ix 퐶(푥, 푝) "푥 chooses 푝". A two-place predicate of first-order logic that is only true