Download publication

Policy Brief

Benefits and drawbacks of European Unemployment Insurance

European Unemployment Insurance is one option for stabilising country specific economic cycles thanks to risk sharing, but it would not substantively influence the area-wide fiscal stance. 

By: , and Date: September 12, 2014 European Macroeconomics & Governance Tags & Topics

Prepared for the ECOFIN in Milan on 13 September 2014.

See also interactive simulation to design your own EUI scheme.

The issue

Unemployment in Europe has increased to high levels and economic growth has remained subdued. A debate on additional policy instruments to address the situation is therefore warranted. Fiscal stabilisation mechanisms have not provided adequate fiscal stabilisation during the crisis in some countries nor in the euro area as a whole. Different preferences and historical developments mean that national labour markets are differently organised, which sometimes hinders the efficient working of the monetary union. European Unemployment Insurance (EUI) has been proposed as a measure to contribute to fiscal policy management and improve labour markets.

Policy challenge

European Unemployment Insurance is one option for stabilising country specific economic cycles thanks to risk sharing, but it would not substantively influence the area-wide fiscal stance. Moral hazard problems are significant but can be reduced by a less generous design and more harmonisation of labour markets. The former would, however, reducethe scheme’s stabilisation effect. Reform and harmonisation of labour markets would improve the functioning of monetary union, but would undermine long-standing preferences and ideals which the subsidiarity principle guarantees. The complexity of the design and implementation of EUI and the question of the rightlegal base suggests that it would be a long-term project and not a measure to help quickly the millions currently unemployed.

View comments
Read about event More on this topic

Upcoming Event

Mar
23
12:00

Artificial intelligence: challenges and opportunities

Rob Atkinson, the founder and president of the Information Technology and Innovation Foundation will present his research work on the impact of artificial intelligence on our lives.

Speakers: Robert Atkinson, Anna Byhovskaya, Sebastian Gerlach and Georgios Petropoulos Topic: Innovation & Competition Policy Location: Bruegel, Rue de la Charité 33, 1210 Brussels
Read article More on this topic More by this author

Blog Post

Zsolt Darvas

Questionable immigration claims in the Brexit white paper

The UK government's white paper on Brexit suggested that the EU's "free movement of people" has made it impossible to control immigration. This seems to rest on an assumption that EU citizens can "move and reside freely" in any member state. Zsolt Darvas finds these arguments problematic, and points out that it is difficult to infer public opinion about immigration from the referendum result.

By: Zsolt Darvas Topic: European Macroeconomics & Governance Date: February 8, 2017
Read article Download PDF More on this topic More by this author

Policy Contribution

Cover PC 01 17

Why is it so hard to reach the EU’s ‘poverty’ target?

The ‘poverty’ target set by the European Commission aims to lift “over 20 million people out of poverty” between 2008 and 2020 in the EU27. Progress to date against this target has been disappointing. Why is it so hard to reach the Europe 2020 ‘poverty’ target? What does the poverty indicator actually measure?

By: Zsolt Darvas Topic: European Macroeconomics & Governance Date: January 19, 2017
Read article More on this topic

Blog Post

MariaDemertzis1 bw
DSC_0798
DSC_0787

The Italian Lira: the exchange rate and employment in the ERM

In the decades before Italy joined the Euro, the Lira was devalued many times relative to the Deutschmark. Were these re-alignments accompanied by long term improvements on the labour market? The data suggests this was not the case.

By: Maria Demertzis, Konstantinos Efstathiou and Fabio Matera Topic: European Macroeconomics & Governance Date: January 13, 2017
Read article More on this topic More by this author

Blog Post

Silvia Merler

Compensating the “losers” of globalisation

What’s at stake: According to some, 2016’s political turmoil shows that the so-called “losers” of globalisation are striking back. There is, however, little agreement on how government should respond to this challenge.

By: Silvia Merler Topic: European Macroeconomics & Governance Date: January 9, 2017
Read article More on this topic

Blog Post

dsc_0809
dsc_1000

The impact of Brexit on Northern Ireland: a first look

Following the proposal from the Scottish Government that Scotland remain in the Single Market, the differing “Brexpectations” of the UK’s four constituent countries are once again back in the news. Scotland is getting a lot of attention in the Brexit debate, but Northern Ireland is an equally interesting case.

By: Filippo Biondi and Inês Goncalves Raposo Topic: European Macroeconomics & Governance Date: December 22, 2016
Read article More on this topic More by this author

Blog Post

Silvia Merler

The American dream

What’s at stake: historian James Truslow Adams, in his 1931 book The Epic of America, stated that the American dream is "that dream of a land in which life should be better and richer and fuller for everyone, with opportunity for each according to ability or achievement”. Few ideas have ever been as powerful as the “American Dream”, and many recent political events hinge on the fear that this “dream” may be dead. Meanwhile, researchers have been trying to measure the reality behind the dream.

By: Silvia Merler Topic: Global Economics & Governance Date: December 19, 2016
Read article More on this topic More by this author

Blog Post

Zsolt Darvas

Explaining inequality

Is technological progress behind growing income inequality? No, according to Zsolt Darvas, who argues that redistribution and the regulation of certain professions were more important factors.

By: Zsolt Darvas Topic: European Macroeconomics & Governance Date: December 13, 2016
Read article Download PDF More on this topic More by this author

Working Paper

cover

Some are more equal than others: new estimates of global and regional inequality

In this Working Paper, Zsolt Darvas estimates the global and regional distribution of income and calculates statistics of global and regional income inequality.

By: Zsolt Darvas Topic: European Macroeconomics & Governance Date: November 8, 2016
Read article Download PDF More on this topic

Blueprint

cover4

An anatomy of inclusive growth in Europe

This Blueprint offers an in-depth analysis of inequalities of income and wealth in the EU, as well as their causes and consequences. How evenly are the benefits of growth distributed in our economies, and what does this mean for fairness and social mobility? How could and should policymakers react?

By: Zsolt Darvas and Guntram B. Wolff Topic: European Macroeconomics & Governance Date: October 27, 2016
Read article More on this topic

Blog Post

Bennet Berger
Elena Vaccarino

Codetermination in Germany – a role model for the UK and the US?

The idea of codetermination, i.e. the cooperation between management and workers in decision-making, has grown in popularity lately. We review the characteristics of codetermination in Germany and ask whether it could be a role model for the UK and the US.

By: Bennet Berger and Elena Vaccarino Topic: European Macroeconomics & Governance Date: October 13, 2016
Read article More on this topic More by this author

Blog Post

Uuriintuya Batsaikhan

Income inequality through decades and books

Discussions on inequality are gathering momentum in policy and academia. One indication of this trend is the frequency of the word “income inequality” occurring in Google’s corpus of books in English (British and American) in the 20th Century.

By: Uuriintuya Batsaikhan Topic: European Macroeconomics & Governance Date: October 12, 2016
Load more posts