Inclusive Institutions and Macroeconomic Outcomes: A Comparative Study of LGBTQ+ Legal Protections in Greece and Hungary

This study examines how the implementation of legal protections for LGBTQ+ individuals as a form of formal institutional change are associated with macroeconomic growth. While previous research has examined the relationship between inclusive institutions and economic growth, there is little research on the specific impact of LGBTQ+ legal protections and economic growth. Using a comparative case study design, this paper analyzes Greece and Hungary between 2010 and 2025. Rainbow Europe scores, created annually by ILGA-Europe, are used as a metric for LGBTQ+ legal protections and are compared with real GDP, FDI, and unemployment rates using Pearson correlation coefficients. A robustness check is performed using a one year lag for the macroeconomic variables to account for gradual institutional change. The results provide only partial support for the hypothesis. Greece displays moderate correlation between legal inclusivity and both FDI and unemployment, while Hungary demonstrates that GDP can increase and unemployment can decrease despite legal inclusivity declining. These findings suggest that LGBTQ+ legal protections alone cannot determine short run macroeconomic performance; rather, these legal protections are one of many factors that determine institutional quality which combined with fiscal policy, historical context, and other macroeconomic indicators create long run macroeconomic growth. Although limited by its small sample size and inability to determine causality, the paper contributes to the emerging literature on institutional economics, LGBTQ+ rights, and economic development.