Social Protection as an Automatic Stabilizer

Arbeitspapier

This paper analyzes the effectiveness of social protection systems in Europe and the US to provide (income) insurance against macro level shocks in terms of automatic stabilizers. We find that automatic stabilizers absorb 38% of a proportional income shock and 47% of an idiosyncratic unemployment shock in Europe, compared to 32% and 34% in the US. There is large heterogeneity within Europe with stabilization being much lower in Eastern and Southern than in Central and Northern Europe. Our results suggest that social transfers, in particular the rather generous systems of unemployment insurance in Europe, play a key role for the stabilization of disposable incomes and explain a large part of the difference in automatic stabilizers between Europe and the US.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: IZA Policy Paper ; No. 18

Classification and Topics

• Classification: Wirtschaft ; Business Fluctuations; Cycles ; Comparative or Joint Analysis of Fiscal and Monetary Policy; Stabilization; Treasury Policy ; Fiscal Policies and Behavior of Economic Agents: Household
• Subject: automatic stabilization ; economic crisis ; taxes and benefits ; Soziale Sicherheit ; Öffentliche Sozialleistungen ; Automatischer Stabilisator ; Wirtschaftskrise ; Vergleich ; Europa ; USA

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Dolls, Mathias ; Fuest, Clemens ; Peichl, Andreas
• Event: Veröffentlichung
• (who): Institute for the Study of Labor (IZA)
• (where): Bonn
• (when): 2010

Further information

• Handle: http://hdl.handle.net/10419/91803
• Last update: 10.03.2025, 11:43 AM CET