Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/216615 
Authors: 
Year of Publication: 
2020
Series/Report no.: 
CESifo Working Paper No. 8219
Publisher: 
Center for Economic Studies and ifo Institute (CESifo), Munich
Abstract: 
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.
Subjects: 
European fiscal integration
unemployment re-insurance
automatic stabilizers
euro area reform
JEL: 
F55
H23
J65
Document Type: 
Working Paper
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