An Unemployment Insurance Scheme for the Euro Area? A Comparison of Different Alternatives using Micro Data

Mathias Dolls, Clemens Fuest, Dirk Neumann () and Andreas Peichl

No 8598, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: We analyze different alternatives how a common unemployment insurance system for the euro area (EA) could be designed and assess their effectiveness to act as an insurance device in the presence of asymmetric macroeconomic shocks. Running counterfactual simulations based on micro data for the period 2000-13, we highlight and quantify the trade-off between automatic stabilization effects and the degree of cross-country transfers. In the baseline, we focus on a non-contingent scheme covering short-term unemployment and find that it would have absorbed a significant fraction of the unemployment shock in the recent crisis. However, 5 member states of the EA18 would have been either a permanent net contributor or net recipient. Our results suggest that claw-back mechanisms and contingent benefits could limit the degree of cross-country redistribution, but might reduce desired insurance effects. We also discuss moral hazard issues at the level of individuals, the administration and economic policy.

Keywords: unemployment insurance; European fiscal integration; automatic stabilizers (search for similar items in EconPapers)
JEL-codes: F55 H23 J65 (search for similar items in EconPapers)
Pages: 48 pages
Date: 2014-10
New Economics Papers: this item is included in nep-eec, nep-ias and nep-lab
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (33)

Published - revised version published in: International Tax and Public Finance, 2018, 25, 273 - 309

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Related works:
Journal Article: An unemployment insurance scheme for the euro area? A comparison of different alternatives using microdata (2018)
Working Paper: An Unemployment Insurance Scheme for the Euro Area? A Comparison of Different Alternatives Using Micro Data (2015)
Working Paper: An unemployment insurance scheme for the euro area? A comparison of different alternatives using micro data (2015)
Working Paper: An unemployment insurance scheme for the euro area? A comparison of different alternatives using micro data (2014)
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