Socio-economic effects of an European Union membership - An empirical study of Hungary and Romania

Abstract: This study examines the socio-economic impact of European Union membership in Hungary and Romania. EU dictates and shapes institutions in member countries, as well as mandates certain reforms. Therefore it is likely that EU accession should have an impact on various socio-economic outcomes. A Difference-in-Difference (DD) model was employed to estimate these effects, using both Hungary and Romania as treatment groups and Croatia as the control group. The countries were chosen on the basis of being new members of the union, but also sharing similar post-communistic features. This study focus on the time period 1999-2011 and several different social and health related variables have been used to capture a wider perspective of the socio-economic development. Three different models were used to estimate the effects of EU membership. Positive effects were seen in some areas, especially in the case of Romania, but not to the magnitude initially anticipated. From these results, it seems doubtful that the EU accession alone is a catalyst of socio-economic development.