Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/91803
Authors: 
Dolls, Mathias
Fuest, Clemens
Peichl, Andreas
Year of Publication: 
2010
Series/Report no.: 
IZA Policy Paper 18
Abstract: 
This paper analyzes the effectiveness of social protection systems in Europe and the US to provide (income) insurance against macro level shocks in terms of automatic stabilizers. We find that automatic stabilizers absorb 38% of a proportional income shock and 47% of an idiosyncratic unemployment shock in Europe, compared to 32% and 34% in the US. There is large heterogeneity within Europe with stabilization being much lower in Eastern and Southern than in Central and Northern Europe. Our results suggest that social transfers, in particular the rather generous systems of unemployment insurance in Europe, play a key role for the stabilization of disposable incomes and explain a large part of the difference in automatic stabilizers between Europe and the US.
Subjects: 
automatic stabilization
economic crisis
taxes and benefits
JEL: 
E32
E63
H2
H31
Document Type: 
Working Paper

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