European Unemployment Insurance Research Articles

Worlds of Welfare Collide: Implementing a European Unemployment Benefit Scheme in the UK

The post-2007 financial crisis has brought renewed interest in a European Unemployment Benefit Scheme (EUBS) as a manifestation of solidarity between citizens of different member states and an economic stabiliser in the event of future asymmetric shocks. The EU-wide benefit would operate in tandem with existing national unemployment benefits. This creates challenges of compatibility given the diversity of approaches to social security within the Union, based on at least four philosophies of welfare: liberal, conservative, social democratic and southern European. This article examines potential legal, operational and political difficulties associated with marrying a EUBS that is at heart a conservative system of social insurance to the UK’s liberal welfare state. Few legal obstacles exist and although the addition of a new, earnings-related benefit to an already complex mix of social protection would raise significant operational issues, these need not be insurmountable. However, fundamental ideological differences would have rendered the EUBS as proposed politically ill-matched with the UK even absent the June 2016 vote to leave the EU. A contributory income maintenance benefit is a poor fit with a residual, largely means-tested national system whose role is limited to offering protection against severe poverty while maintaining work incentives and minimising costs.

Toward a Mutualization of European Unemployment Insurance? On Limiting the Downsides of a Fiscal Transfer System for the Eurozone

There is a large, yet growing debate about the need to complement the European monetary union with a stronger fiscal union. This article reviews the potential trade-offs between effectiveness, moral hazard problems, and permanent redistribution. Addressing the counter-arguments against a tighter fiscal union is essential to overcome the political reluctance in some member states that are concerned about large amounts of redistribution. We discuss clawback mechanisms that have been suggested in the literature as a measure to limit redistribution, but conclude that clawbacks are undesirable, as they would essentially destroy the insurance value of a fiscal union. Instead, we propose that a clearly defined exit option as a guarantee against involuntary redistribution can make entry into a stronger fiscal union less risky and hence more attractive for member states.

Institutional Moral Hazard in the Multi-Tiered Regulation of Unemployment and Social Assistance Benefits and Activation - A Summary of Eight Country Case Studies

This paper studies eight countries in which the regulation of unemployment benefits and related benefits and the concomitant activation of unemployed individuals has a multi-tiered architecture. It assesses their experiences and tries to understand possible problems of ‘institutional moral hazard’ that may emerge in the context of a hypothetical European Unemployment Benefit Scheme.

Drowned by Numbers? Designing an EU-wide Unemployment Insurance

The severity of the recent crisis has given rise to several proposals for the creation of a European unemployment insurance system. In this paper, we first explore the theoretical backgrounds of a common insurance system. We, then, analyze the main features of an EU-wide unemployment insurance, and explore its financial and political sustainability, under different scenarios, including a “US-equivalent” one. We finally highlight key issues with regard to implementation and potential undesirable effects.

Designing a European unemployment insurance scheme

With disparities in national unemployment rates reaching record levels, the debate on fi scal stabilisers in Europe has gained new momentum. Can a European unemployment insurance scheme help to absorb asymmetric shocks and bring about the desired level of macroeconomic stabilisation? What should such an unemployment benefi t system look like? The contributions to this Forum explore the benefi ts expected from a European unemployment insurance scheme and discuss the diffi culties in establishing such a policy.

Da estabilização macroeconómica às ‘reformas estruturais’: o papel do sistema de subsídio de desemprego europeu

Da estabilização macroeconómica às ‘reformas estruturais’: o papel do sistema de subsídio de desemprego europeu

The Strains of Commitment: A Federal System Needs a Common Fiscal Policy

The arguments raised in this brief article relate to the problem of fiscal federalism. The article points to the potential contradictions arising from the existence of a European constitution and a broader federal structure already in place in the EU, in the absence of a significant central fiscal system. It then argues that the arguments proposed for the maintenance of full fiscal independence by EMU member countries are weak and do not stand on closer scrutiny. Pooling of some fiscal instruments over which national governments have no or little control is the optimum strategy. It proceeds to argue for the creation of a European Fund that will gradually evolve to a European Unemployment Insurance Fund for all countries of the EU, or initially for members of EMU, as an automatic stabilizer, as insurance against economic and fiscal shocks and as a means for promoting social and political cohesion within the Union.

Some Phases of European Unemployment Insurance Experience

Some Phases of European Unemployment Insurance Experience