An Unemployment Re-Insurance Scheme for the Eurozone? Stabilizing and Redistributive Effects

Arbeitspapier

This paper develops a decomposition framework to study the importance of different stabilization channels of an unemployment re-insurance scheme for the euro area. Running counterfactual simulations based on household micro data for the period 2000–16, the paper finds that the re-insurance would have cushioned on average 12% (8%) of income losses through interregional (intertemporal) smoothing. These results suggest that the smoothing effect of the re-insurance which is due to asymmetries in labor market shocks would have raised the income insurance of a typical unemployment insurance scheme in the euro area by more than 50%. The simulated re-insurance scheme would have been revenue-neutral at EA-19, but not at the member-state level. Average annual net contributions would have amounted to -0.1–0.1 per cent of GDP. The paper discusses how different variants of the re-insurance might affect the risk of moral hazard.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: CESifo Working Paper ; No. 8219

Classification and Topics

• Classification: Wirtschaft ; International Institutional Arrangements ; Taxation and Subsidies: Externalities; Redistributive Effects; Environmental Taxes and Subsidies ; Unemployment Insurance; Severance Pay; Plant Closings
• Subject: European fiscal integration ; unemployment re-insurance ; automatic stabilizers ; euro area reform

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Dolls, Mathias
• Event: Veröffentlichung
• (who): Center for Economic Studies and ifo Institute (CESifo)
• (where): Munich
• (when): 2020

Further information

• Handle: http://hdl.handle.net/10419/216615
• Last update: 10.03.2025, 11:45 AM CET