Risk Sharing in Currency Unions: The Migration Channel

Müller, Gernot, Wilhelm Kohler and Susanne Wellmann
Authors registered in the RePEc Author Service: Gernot J. Müller

No 16178, CEPR Discussion Papers from C.E.P.R. Discussion Papers

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, we formally integrate migration as a distinct channel into the standard framework used to quantify risk sharing. Comparing the euro area and the US we find that migration contributes significantly to risk sharing across US states, but not across the euro area. We also present survey evidence showing that migration rates are about 20 times higher in the US. The overall amount of risk sharing in the US is higher by a factor of two.

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: 2021-05
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Related works:
Journal Article: Risk sharing in currency unions: The migration channel (2023)
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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