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The impact of a European unemployment benefit scheme on labor supply and income distribution

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  • Agathe Simon

    (University of Strasbourg - BETA)

Abstract

This presentation investigates the effect of the introduction of a European unemployment insurance scheme (EMU-UI) on the labor supply and the income distribution in the Eurozone countries. Based on a structural estimation of the labor supply and using the European tax-benefit microsimulation model EUROMOD, I simulate various scenarios of reform. The results show that the labor supply response to the introduction of an EMU-UI differs substantially across countries and depends on the design of the EMU-UI. I find that a flat EMU-UI scheme implies very strong disincentive to work but reduces poverty. On the contrary, a fully contribution-related EMU-UI system limits much more the distortions on the labor market in most countries but has limited effects on poverty and inequality. An EMU-UI with a common replacement rate, articulated with floor and ceiling amounts, would allow for upward convergence because it would strongly reduce poverty and inequality in several countries while not inducing important labor supply reduction.

Suggested Citation

  • Agathe Simon, 2022. "The impact of a European unemployment benefit scheme on labor supply and income distribution," French Stata Users' Group Meetings 2022 14, Stata Users Group.
    • Handle: RePEc:boc:fsug22:14
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    File URL: http://repec.org/frsug2022/France22_Simon2.pdf
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    References listed on IDEAS

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