An unemployment re-insurance scheme for the eurozone? Stabilizing and redistributive effects

Mathias Dolls

European Economic Review, 2024, vol. 170, issue C

Abstract: This paper develops a decomposition framework to study the importance of different stabilization channels of an unemployment re-insurance scheme for the euro area. Running counterfactual simulations based on household micro data for the period 2000–21 and studying the effect of different trigger variables and activation rules, the paper finds that the re-insurance would have cushioned on average 7%–14% (3%–6%) of employment income losses through interregional (intertemporal) smoothing. The simulated re-insurance scheme would have been revenue-neutral at EA-19, but not at the member-state level. Average annual inpayments and payouts would have been below 0.1 per cent of GDP. A back-of-the-envelope calculation shows that the re-insurance could offset up to 18% of future output shocks. These results suggest that a re-insurance would significantly strengthen public risk sharing in the euro area.

Keywords: European fiscal integration; Unemployment re-insurance; Automatic stabilizers; Euro area reform (search for similar items in EconPapers)
JEL-codes: F55 H23 J65 (search for similar items in EconPapers)
Date: 2024
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Citations: View citations in EconPapers (1)

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Related works:
Working Paper: An Unemployment Re-Insurance Scheme for the Eurozone? Stabilizing and Redistributive Effects (2020)
Working Paper: An Unemployment Re-Insurance Scheme for the Eurozone? Stabilizing and Redistributive Effects (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:eecrev:v:170:y:2024:i:c:s0014292124002010

DOI: 10.1016/j.euroecorev.2024.104872

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