An Unemployment Insurance Scheme for the Euro Area: A simulation exercise of two options

Miroslav Beblavý () and Ilaria Maselli

CEPS Papers from Centre for European Policy Studies

Abstract: This study offers an in-depth economic analysis of the two main proposals for the creation of a European unemployment insurance scheme. One proposes the creation of a harmonised European unemployment benefit scheme that would apply automatically to every eligible unemployed person. The alternative, termed ‘reinsurance’ here, would transfer funds to national unemployment insurance schemes to finance benefits from the centre to the periphery when unemployment is measurably higher than normal. The rationale behind these proposals is to set up an EU-level shock absorber to overcome coordination failures and the crisis-budget constraints of individual countries. The authors consider the possible trade-offs and challenges of, for example, the definition of the trigger, the fiscal rule and the harmonisation of national benefits. They conclude that while both options are viable, ‘reinsurance’ offers a stronger stabilisation effect for the same amount of European distribution.

Pages: 74 pages
Date: 2014-12
New Economics Papers: this item is included in nep-eec and nep-ias
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Persistent link: https://EconPapers.repec.org/RePEc:eps:cepswp:9889

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