Risk sharing in currency unions: The migration channel

Wilhelm Kohler, Gernot Müller and Susanne Wellmann

European Economic Review, 2023, vol. 158, issue C

Abstract: International risk sharing insulates consumption from country-specific business-cycle fluctuations. This matters for countries in currency unions who lack monetary autonomy. In the spirit of Mundell (1961), we formally integrate migration as a distinct channel into the standard framework used to quantify risk sharing. For the US we find that interstate migration absorbs about 10 percent of the fluctuations in state-level output, for the euro area the corresponding number is 5 percent, consistent with the fact that migration rates are about 15 times higher in the US. The overall amount of risk sharing in the US is approximately three times as high.

Keywords: Risk sharing; Currency unions; Labour migration; Migration rates; Euro area (search for similar items in EconPapers)
JEL-codes: F22 F41 G15 J61 (search for similar items in EconPapers)
Date: 2023
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Related works:
Working Paper: Risk Sharing in Currency Unions: The Migration Channel (2021)
Working Paper: Risk Sharing in Currency Unions: The Migration Channel (2021)
Working Paper: Risk sharing in currency unions: The migration channel (2021)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:eecrev:v:158:y:2023:i:c:s001429212300168x

DOI: 10.1016/j.euroecorev.2023.104540

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