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A Common European Unemployment Insurance – A Much Debated Route toward European Fiscal Union

Walpurga Köhler-Töglhofer () and Alfred Stiglbauer ()
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Walpurga Köhler-Töglhofer: Oesterreichische Nationalbank, Economic Analysis Division
Alfred Stiglbauer: Oesterreichische Nationalbank, Economic Analysis Division, http://www.oenb.at

Monetary Policy & the Economy, 2014, issue 4, 35-52

Abstract: The crisis has reignited a debate on deeper fiscal integration in the euro area. The goal is to improve the capability of the currency union to cope with asymmetric shocks. One instrument in this context is the implementation of a European unemployment insurance (EUI) scheme aiming at automatic stabilization of income and aggregate output in countries affected by adverse macroeconomic shocks and rising unemployment. Recently, a number of proposals and estimates of the economic effects of such a scheme have been published. The empirical analyses indicate a non-negligible stabilization effect of an EUI. However, an EUI is likely to face several problems originating, among other things, from structural differences in labor markets and potential moral hazard by Member States. An EUI therefore does not appear to be the most appropriate approach to increasing common risk sharing.

Keywords: Automatic stabilization; unemployment insurance; monetary union; fiscal union (search for similar items in EconPapers)
JEL-codes: E63 F45 H55 J65 (search for similar items in EconPapers)
Date: 2014
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