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A European Unemployment Benefits Scheme: The rationale and the challenges ahead

Author

Listed:
  • Beblavý, Miroslav
  • Marconi, Gabriele
  • Maselli,Ilaria
Abstract
This paper aims to frame the debate on a European Unemployment Benefits Scheme (EUBS), as a shock absorber for EU economies, around its origins on the one hand, and its most controversial aspects, on the other. The paper focuses on several key aspects of the EUBS, the first being the options for financing the scheme. This can be divided into those requiring the imposition of an ad-hoc tax in member countries and those relying on general contributions from these countries, which can in turn be financed in various ways. Second, it focuses on the extent to which harmonisation of current national unemployment benefit schemes would be needed. Harmonisation implies changing national legislation and practices, which creates political and administrative difficulties. Third, the study examines the problem of schemes generating regular monetary transfers from certain countries to others, and the associated problem of moral hazard. There are two broad ways to solve this problem: ex-ante or ex-post balancing. Fourth, it discusses which countries should join the EUBS. There are arguments for limiting membership to euro-area members, or for extending it to the entire European Union, but participation should in any case be mandatory. Finally, it reviews the costs of the various forms of EUBSs proposed in the literature, concluding that they tend to stay below 1% of the member countries’ aggregate GDP. This paper constitutes the first paper prepared in the context of a research project on “The Feasibility and Added Value of a European Unemployment Benefits Scheme”, commissioned by DG EMPL of the European Commission and carried out by a consortium of researchers led by CEPS. It is re-published by CEPS with the kind permission of the European Commission and can also be downloaded from the Commission’s website.

Suggested Citation

  • Beblavý, 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.
    • Handle: RePEc:eps:cepswp:10952
    as

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    File URL: https://www.ceps.eu/system/files/CEPS%20SR%20No%20119%20EUBS_0.pdf
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    References listed on IDEAS

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    Cited by:

    1. Léo Aparisi de Lannoy & Xavier Ragot, 2017. "Une (ré) assurance chômage européenne," SciencePo Working papers Main hal-03455381, HAL.
    2. Beblavý, Miroslav & Lenaerts, Karolien & Maselli, Ilaria, 2017. "Design of a European Unemployment Benefit Scheme," CEPS Papers 12263, Centre for European Policy Studies.
    3. 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.
    4. Thirion, Gilles, 2017. "European Fiscal Union: Economic rationale and design challenges," CEPS Papers 12160, Centre for European Policy Studies.
    5. Doris Prammer & Lukas Reiss, 2018. "How to increase fiscal stabilization at the euro area level?," Monetary Policy & the Economy, Oesterreichische Nationalbank (Austrian Central Bank), issue Q2/18, pages 111-131.
    6. De Grauwe, Paul & Ji, Yuemei, 2016. "Flexibility versus Stability: A difficult trade-off in the eurozone," CEPS Papers 11530, Centre for European Policy Studies.
    7. Lenaerts, Karolien & Paquier, Félix & Simonetta, Suzanne, 2017. "Unemployment Insurance in America: A model for Europe?," CEPS Papers 12684, Centre for European Policy Studies.
    8. Olanubi, Sijuola Orioye & Osode, Oluwanbepelumi Esther & Adegboye, Abiodun Adewale, 2020. "Public sector efficiency in the design of a euro-area social benefit scheme," Journal of Policy Modeling, Elsevier, vol. 42(3), pages 615-627.
    9. Schmid, Günther, 2020. "Beyond European unemployment insurance. Less moral hazard, more moral assurance?," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 26(4), pages 465-480.
    10. Kuester, Keith & Jung, Philip & Ignaszak, Marek, 2020. "Federal unemployment reinsurance and local labor-market policies," CEPR Discussion Papers 15465, C.E.P.R. Discussion Papers.
    11. Koester, Gerrit & Sondermann, David, 2018. "A euro area macroeconomic stabilisation function: assessing options in view of their redistribution and stabilisation properties," Occasional Paper Series 216, European Central Bank.
    12. repec:spo:wpmain:info:hdl:2441/5i0jcpu6sk96cpn76n8q0ie20c is not listed on IDEAS
    13. Xavier Jara Tamayo, Holguer & Simon, Agathe, 2021. "The income protection role of an EMU-wide unemployment insurance system: the case of atypical workers," EUROMOD Working Papers EM6/21, EUROMOD at the Institute for Social and Economic Research.
    14. Olanubi, Oluwanbepelumi Esther & Olanubi, Sijuola Orioye, 2022. "Public sector efficiency in the design of a COVID fund for the euro area," Research in Economics, Elsevier, vol. 76(3), pages 163-169.
    15. Léo Aparisi de Lannoy & Xavier Ragot, 2017. "Une (ré) assurance chômage européenne," Sciences Po publications info:hdl:2441/69i5rbio799, Sciences Po.
    16. Christopher J. O’Leary & Burt S. Barnow & Karolien Lenaerts, 2020. "Lessons from the American federal‐state unemployment insurance system for a European unemployment benefits system," International Social Security Review, John Wiley & Sons, vol. 73(1), pages 3-34, January.
    17. De Grauwe Paul & Ji Yuemei, 2018. "Core-Periphery Relations in the Eurozone," The Economists' Voice, De Gruyter, vol. 15(1), pages 1-15, December.
    18. repec:hal:spmain:info:hdl:2441/5i0jcpu6sk96cpn76n8q0ie20c is not listed on IDEAS
    19. 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.

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