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

Publication type

Research Paper


Publication date

May 20, 2014


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





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