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A Common Unemployment Insurance System for the Euro Area

Author

Listed:
  • Sebastian Dullien
  • Ferdinand Fichtner

Abstract

A European transfer system could contribute to stabilization of the euro area by synchronizing business cycles in the monetary union, thus simplifying the common monetary policy. Such a system is proposed here in the form of a European unemployment insurance scheme. Compared to other forms of fiscal transfer systems, this has some advantages: by putting the focus on short-term unemployment, an automatic link between payments and the cyclical situation of a member state is ensured, making the system relatively robust against political manipulation. Furthermore, this set-up will most likely prevent a case in which countries systematically become net recipients or net contributors. Therefore, the risk of permanently creating transfers to single countries is low. While a European unemployment insurance system would not be suitable for removing or eliminating structural discrepancies between countries (such as those that caused the euro crisis), cyclical imbalances within a monetary union would be effectively dampened, at not much additional administrative cost. Such a system could thus become an important stabilizing element for the member states of the European Monetary Union.

Suggested Citation

  • Sebastian Dullien & Ferdinand Fichtner, 2013. "A Common Unemployment Insurance System for the Euro Area," DIW Economic Bulletin, DIW Berlin, German Institute for Economic Research, vol. 3(1), pages 9-14.
  • Handle: RePEc:diw:diwdeb:2013-1-2
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    File URL: http://www.diw.de/documents/publikationen/73/diw_01.c.413714.de/diw_econ_bull_2013-01_2.pdf
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    Citations

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    Cited by:

    1. Marius Clemens & Guillaume Claveres, 2017. "Unemployment Insurance Union," 2017 Meeting Papers 1340, Society for Economic Dynamics.
    2. Etienne Farvaque & Florence Huart, 2017. "A policymaker’s guide to a Euro area stabilization fund," Economia Politica: Journal of Analytical and Institutional Economics, Springer;Fondazione Edison, vol. 34(1), pages 11-30, April.
    3. repec:elg:ejeepi:v:14:y:2017:i:1:p92-116 is not listed on IDEAS
    4. Eckhard Hein & Daniel Detzer, 2014. "Coping with imbalances in the Euro area: Policy alternatives addressing divergences and disparities between member countries," Working papers wpaper63, Financialisation, Economy, Society & Sustainable Development (FESSUD) Project.
    5. Walpurga Köhler-Töglhofer & Alfred Stiglbauer, 2014. "A Common European Unemployment Insurance – A Much Debated Route toward European Fiscal Union," Monetary Policy & the Economy, Oesterreichische Nationalbank (Austrian Central Bank), issue 4, pages 35-52.
    6. Jörg Bibow, 2013. "Lost at Sea: The Euro Needs a Euro Treasury," IMK Studies 35-2013, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute.
    7. Leila E. Davis & Charalampos Konstantinidis & Yorghos Tripodis, 2017. "A proposal for a federalized unemployment insurance mechanism for Europe," European Journal of Economics and Economic Policies: Intervention, Edward Elgar Publishing, vol. 14(1), pages 92-116, April.
    8. Achim Wambach & Ines Läufer, 2015. "Europäische Wirtschafts- und Währungsunion: Lernen aus der Krise," Otto-Wolff-Institut Discussion Paper Series 02/2015, Otto-Wolff-Institut für Wirtschaftsordnung, Köln, Deutschland.

    More about this item

    Keywords

    economic stabilization; European integration; unemployment insurance;

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • E63 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Comparative or Joint Analysis of Fiscal and Monetary Policy; Stabilization; Treasury Policy
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics

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