This paper studies tax evasion and the contribution-benefit link in the context of maternity benefits in Hungary. Earnings and employment patterns suggest pre-pregnancy underreporting, followed by formalization of some earnings and employment during pregnancy to increase benefits. Reported earnings in small, domestic, and less productive firms bunch at the minimum wage before pregnancy and the benefit-maximizing threshold during pregnancy. Using a policy reform, the paper shows that the size of the reporting response tracks changing reporting incentives. Increases in pre-childbirth reported earnings are partially sticky after maternity leave. The results indicate that linking benefits to contributions can reduce tax evasion and improve formalization.

We estimate the impact of firm quality -- primarily measured by firm productivity -- on the health maintenance of employees. Using linked employer-employee administrative panel data from Hungary, we analyze the dynamics of healthcare use before and after moving to a new firm. We show that moving to a more productive firm leads to higher consumption of drugs for cardiovascular conditions and more physician visits, without evidence of deteriorating physical health, and, among older workers, to lower consumption of medications for mental health conditions. The results are robust to using alternative firm quality indicators based on firm-level wages and worker flows, and to controlling for firm size, individual wage and possible peer effects. The results suggest that more productive firms have a beneficial effect on the detection of previously undiagnosed chronic physical illnesses and on mental health. Plausible mechanisms include higher quality occupational health check-ups and less stressful working conditions.

We study the impact of delayed school entry on the locus of control (LoC) among Hungarian students, using statutory cutoff dates for school enrollment as a plausibly exogenous variation. Our findings indicate a causal relationship between delayed school entry and an increase in internal LoC, with a policy effect of approximately one-tenth of a standard deviation for 8th-grade students, which corresponds to a one-third standard deviation effect for complier students. The policy implications of these findings are significant, providing evidence that delaying school start could serve as an effective intervention to enhance LoC among students, which is positively associated with many later life outcomes.

In this study, we examine how parents’ educational aspirations for their offspring (referred to as parental preferences) are related to university attendance. Even after controlling for the cognitive abilities of the child, we document a considerable variation in parental preferences, which are, in turn, strongly associated with university attendance. Utilizing regressions based on machine learning techniques, we also find that parental preferences exert a large and significant effect on university
attendance, even when accounting for factors that influence parental preferences, including parental education, household characteristics, effort, expectations, and the child’s cognitive and non-cognitive abilities.

We study the role that firms play in social insurance benefit uptake after their workers experience health shocks. Social insurance in our setting, Hungary, is universal and comprehensive, thus allowing us to quantify the impact of firms on benefit uptake and labor market outcomes on top of the social safety net. Using matched employer-employee administrative data linked to individual-level health records, we find that firm responses to worker health shocks are heterogeneous: workers hit by a health shock at high-quality firms are less likely to take up disability insurance or exit the labor force than those at low-quality firms.