An Unemployment Insurance Scheme for the Euro Area: A Simulation Exercise of Two Options

CEPS Special Reports No. 98 / December 2014

74 Pages Posted: 7 Feb 2015

See all articles by Miroslav Beblavý

Miroslav Beblavý

Centre for European Policy Studies (CEPS)

Ilaria Maselli

Centre for European Policy Studies (CEPS)

Date Written: December 9, 2014

Abstract

This study offers an in-depth economic analysis of the two main proposals for the creation of a European unemployment insurance scheme. One proposes the creation of a harmonised European unemployment benefit scheme that would apply automatically to every eligible unemployed person. The alternative, termed ‘reinsurance’ here, would transfer funds to national unemployment insurance schemes to finance benefits from the centre to the periphery when unemployment is measurably higher than normal.

The rationale behind these proposals is to set up an EU-level shock absorber to overcome coordination failures and the crisis-budget constraints of individual countries. The authors consider the possible trade-offs and challenges of, for example, the definition of the trigger, the fiscal rule and the harmonisation of national benefits. They conclude that while both options are viable, ‘reinsurance’ offers a stronger stabilisation effect for the same amount of European distribution.

Keywords: unemployment, unemployment insurance, European unemployment benefit scheme

Suggested Citation

Beblavý, Miroslav and Maselli, Ilaria, An Unemployment Insurance Scheme for the Euro Area: A Simulation Exercise of Two Options (December 9, 2014). CEPS Special Reports No. 98 / December 2014, Available at SSRN: https://ssrn.com/abstract=2561197

Miroslav Beblavý (Contact Author)

Centre for European Policy Studies (CEPS) ( email )

1 Place du Congres
Brussels, 1000
Belgium

Ilaria Maselli

Centre for European Policy Studies (CEPS) ( email )

1 Place du Congres, 1000
Brussels, 1000
Belgium

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