Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/123223
Authors: 
Dolls, Mathias
Fuest, Clemens
Neumann, Dirk
Peichl, Andreas
Year of Publication: 
2015
Series/Report no.: 
CESifo Working Paper 5581
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 insur-ance effects. We also study heterogeneous effects within countries and discuss moral hazard issues at the level of individuals, the administration and economic policy.
Subjects: 
European fiscal integration
unemployment insurance
automatic stabilizers
JEL: 
F55
H23
J65
Document Type: 
Working Paper

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