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The role of an EMU unemployment insurance scheme on income protection in case of unemployment

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  • Xavier Jara Tamayo, Holguer
  • Tumino, Alberto
  • Sutherland, Holly

Abstract

The aim of this paper is to explore the potential of an EMU unemployment insurance scheme (EMU-UI) to improve the income protection available to individuals and their families in case of unemployment. Our analysis uses an illustrative EMU-UI scheme, which has a common design across member states and can therefore be considered as a benchmark with respect to which gaps in national unemployment insurance schemes are assessed. We make use of EUROMOD, the EU-wide tax-benefit microsimulation model, to simulate entitlement to the national and EMU-UI and calculate their effect on household disposable income for all individuals currently in work and those with the highest unemployment risk, in case they would become unemployed. Our results show that the EMU-UI has the potential to reduce current gaps in coverage where these are sizeable due to stringent eligibility conditions, to increase generosity where current unemployment benefits are low relative to earnings and to extend duration where this is shorter than twelve months. The illustrative EMU-UI would reduce the risk of poverty for the potentially new unemployed and would have a positive effect on household income stabilization. The extent of these effects varies in size across EMU member states for two main reasons: differences in the design of national unemployment insurance schemes and differences in labor force characteristics across member states.

Suggested Citation

  • Xavier Jara Tamayo, Holguer & Tumino, Alberto & Sutherland, Holly, 2016. "The role of an EMU unemployment insurance scheme on income protection in case of unemployment," EUROMOD Working Papers EM11/16, EUROMOD at the Institute for Social and Economic Research.
    • Handle: RePEc:ese:emodwp:em11-16
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    References listed on IDEAS

    as
    1. Andrea Brandolini & Francesca Carta & Francesco D'Amuri, 2016. "A Feasible Unemployment-Based Shock Absorber for the Euro Area," Journal of Common Market Studies, Wiley Blackwell, vol. 54(5), pages 1123-1141, September.
    2. repec:oup:ecpoli:v:28:y:2013:i:75:p:375-422 is not listed on IDEAS
    3. Beblav�, Miroslav & Marconi, Gabriele & Maselli,Ilaria, 2015. "A European Unemployment Benefits Scheme: The rationale and the challenges ahead," CEPS Papers 10952, Centre for European Policy Studies.
    4. Olivier Bargain & Mathias Dolls & Clemens Fuest & Dirk Neumann & Andreas Peichl & Nico Pestel & Sebastian Siegloch, 2013. "Fiscal union in Europe? Redistributive and stabilizing effects of a European tax-benefit system and fiscal equalization mechanism [A strong employment agenda – the pathway to economic recovery]," Economic Policy, CEPR, CESifo, Sciences Po;CES;MSH, vol. 28(75), pages 375-422.
    5. Arulampalam, Wiji & Booth, Alison L & Taylor, Mark P, 2000. "Unemployment Persistence," Oxford Economic Papers, Oxford University Press, vol. 52(1), pages 24-50, January.
    6. Beblav�, Miroslav & Maselli, Ilaria, 2014. "An Unemployment Insurance Scheme for the Euro Area: A simulation exercise of two options," CEPS Papers 9889, Centre for European Policy Studies.
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    Cited by:

    1. 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.
    2. H. Xavier Jara & Katrin Gasior & Mattia Makovec, 2020. "Work Incentives at the Extensive and Intensive Margin in Europe: The Role of Taxes, Benefits and Population Characteristics," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 152(2), pages 705-778, November.

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