On the design of a European unemployment insurance system

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• dc.contributor.author Ábrahám, Árpádca
• dc.contributor.author Brogueira de Sousa, Joãoca
• dc.contributor.author Marimon, Ramonca
• dc.contributor.author Mayr, Lukasca
• dc.date.accessioned 2018-09-25T09:27:04Z
• dc.date.available 2018-09-25T09:27:04Z
• dc.date.issued 2018-04
• dc.description.abstract We assess the benefits of a potential European Unemployment Insurance System (EUIS) using a multi-country dynamic general equilibrium model with labour market frictions. Our calibration provides a novel diagnosis of the European labour markets, revealing the key parameters – in particular, job-separation and job-finding rates – that explain their different performance in terms of unemployment (or employment) and its persistence. We show that there are only small welfare gains from insuring against country-specific cyclical fluctuations in unemployment expenditures. However, we find that there are substantial gains from reforming currently suboptimal unemployment benefit systems. In spite of country differences, it is possible to unanimously agree on an EUIS with unlimited duration of eligibility, which eliminates the risk of not finding a job before the receipt of benefits ends, and a low replacement rate of 15%, which stabilizes incentives to work and save. We argue that such reforms are more effectively designed at the European level than at the national level because national governments do not take into account general equilibrium effects of their reforms on citizens in other countries. Concerns regarding the political feasibility of such a system are addressed through country-specific contribution payments that eliminate cross-country transfers. The resulting tax differences across countries may be the best statistic of their structural labour market differences, in terms of job creation and destruction, providing clear incentives for reform.ca
• dc.description.sponsorship The ADEMU Working Paper Series is being supported by the European Commission Horizon 2020 European Union funding for Research & Innovation, grant agreement No 649396.
• dc.format.mimetype application/pdfca
• dc.identifier.uri http://hdl.handle.net/10230/35490
• dc.language.iso engca
• dc.relation.ispartofseries ADEMU Working Paper Series;106
• dc.relation.projectID info:eu-repo/grantAgreement/EC/H2020/649396
• dc.rights This is an Open Access article distributed under the terms of the Creative Commons Attribution License Creative Commons Attribution 4.0 International, which permits unrestricted use, distribution and reproduction in any medium provided that the original work is properlyattributed.ca
• dc.rights.accessRights info:eu-repo/semantics/openAccessca
• dc.rights.uri https://creativecommons.org/licenses/by/4.0/ca
• dc.subject.other Labour marketsca
• dc.subject.other Unemployment insuranceca
• dc.subject.other Job creationca
• dc.subject.other Job destructionca
• dc.subject.other Risk-sharingca
• dc.subject.other Economic Monetary Unionca
• dc.title On the design of a European unemployment insurance systemca
• dc.type info:eu-repo/semantics/workingPaperca