An unemployment insurance scheme for the euro area: evidence at the micro level – work in progress

Authors

Mathias Dolls, Clemens Fuest, Dirk Neumann, Andreas Peichl

Publication Date

May 2014

Summary

The Great Recession and the resulting European debt crisis revived a debateabout deeper fiscal integration in the Eurozone. We discuss differentalternatives how an unemployment insurance system for the euro areacould be designed and run counterfactual simulations based on micro datato analyze the effectiveness of a basic scheme to act as an insurance devicein the presence of asymmetric macroeconomic shocks. We find that such ascheme could be implemented with a relatively small annual budget ofroughly 61 billion euros over the period 2008‐2013. Net benefits wouldhave stabilized incomes in particular in Cyprus, Estonia, Greece, Ireland,Portugal and Spain whereas Austria, Germany and the Netherlands wouldhave been the largest net contributors. With a predicted increase in outputof only up to 0.2 per cent relative to a situation with existing pre‐crisisnational unemployment insurance systems, our results suggest that a basiceuro area unemployment insurance scheme would have had only moderategrowth‐enhancing effects at the euro area level.

Publication type

Research Paper

Links

http://www.google.co.uk/url?sa=t&rct=j&q=&esrc=s&source=web&cd=1&cad=rja&uact=8&ved=0CCAQFjAA&url=http%3A%2F%2Fwww.euroframe.org%2Ffiles%2Fuser_upload%2Feuroframe%2Fdocs%2F2014%2FSession%25205%2FEUROF14_Dolls_etal.pdf&ei=t36ZU8K4EY2a1AW88YG4Ag&usg=AFQjCNFpaN_7AGH4z9CCxh4J7N0h2C5gLw&bvm=bv.68911936,d.ZGU

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