An unemployment insurance scheme for the euro area? A comparison of different alternatives using micro data

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

No EM15/15, EUROMOD Working Papers from EUROMOD at the Institute for Social and Economic Research

Abstract: We analyze different options for the design of a common unemployment insurance system for the euro area (EA). We 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 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, four member states of the EA18 would have been either a permanent net contributor or net recipient. Our results suggest that contingent benefits could limit the degree of cross-country redistribution, but might reduce desired insurance effects. We also study heterogeneous effects within countries and discuss moral hazard issues at the level of individuals, the administration and economic policy.

Date: 2015-12-22
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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 (2014)
Working Paper: An unemployment insurance scheme for the euro area? A comparison of different alternatives using micro data (2014)
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