European unemployment insurance

Short description: proposed transfer system for the Eurozone

European unemployment insurance (also known as a European unemployment benefit scheme \- EUBS) is a proposed transfer system for the Eurozone that is intended to provide macroeconomic stabilization. Such a system would drain purchasing power from booming economies, preventing overheating while bolstering economies which experience a recession.[1]

## Contents

* 1 Variants under discussion
* 2 History
* 3 Political debate
* 4 See also
* 5 References
* 6 External links

## Variants under discussion

There are two basic variants of the system discussed: a "genuine" European unemployment insurance and an "equivalent" European unemployment insurance. In a "genuine" system, employees in the Eurozone would be directly insured against the unemployment risk through a European insurance scheme which would pay a wage replacement in the case of unemployment. In an "equivalent" system, a European fund would pay out funds to either the national budget or national unemployment insurance in case unemployment increases steeply in a member state.[2]

Thus, an "equivalent" European unemployment insurance can also be seen as a reinsurance for national unemployment systems.[3]

## History

The idea of a European unemployment insurance goes back to the 1970s, when the possibility of introducing a common currency for the European Community was first mentioned in the Marjolin Report. The authors of the Marjolin Report state:[4] "...the means of redressing imbalances between Community countries should be considerably reinforced…. The introduction of a community system of unemployment benefit would constitute an effective approach."

Reference to the debate was made in the MacDougall Report and in a number of works on possible transfer systems commissioned by the European Commission in the early 1990s, when the institutions for managing the common currency were designed.[5]

The modern debate was started with proposals by the German economist Sebastian Dullien who in 2007 and 2008 published several papers on a possible European unemployment insurance[6] and later worked on the concept more in detail for the European Commission.[7][8] The idea gained new prominence after the onset of the European debt crisis, when the lack of a fiscal capacity for the euro area became evident, and the idea was mentioned in the four presidents' report of 2012.[9]

In 2014, a large consortium under the leadership of the Centre for European Policy Studies think tank in Brussels was asked by the European Commission to write an extensive feasibility study on a potential unemployment scheme which detailed the different options for such a proposal, the technical challenges and the macroeconomic impact. The study was presented in early 2017.[10]

The first macroeconomic simulation of a European unemployment insurance system using a dynamic general equilibrium model of European labour markets was presented in a paper by Árpád Ábrahám, João Brogueira de Sousa, Ramon Marimon and Lukas Mayr, at the time economists in the Department of Economics of the European University Institute.[11]

## Political debate

Former European Commissioner for Employment, Social Affairs and Inclusion László Andor repeatedly called for the introduction of a European unemployment insurance.[12]

In June 2018, the German finance minister Olaf Scholz proposed European unemployment insurance as an element of Eurozone governance reform.[13]

## See also

* Unemployment benefits

## References

1. ↑ Dullien, Sebastian (2015). "European Unemployment Insurance". The New Palgrave Dictionary of Economics. pp. 1–12. doi:10.1057/978-1-349-95121-5_3006-1. ISBN 978-1-349-95121-5.
2. ↑ "A European Unemployment Benefit Scheme - The rationale and the challenges ahead". http://ec.europa.eu/social/BlobServlet?docId=14491&langId=en.
3. ↑ Beblavý, Miroslav. "Design of a European unemployment benefits scheme and its dimensions: What is examined in the pilot project?". https://www.ceps.eu/sites/default/files/EUBS design_Beblavy.pdf. Retrieved 11 August 2018.
4. ↑ "Report of the study group 'Economic and Monetary Union 1980'". p. 34. https://www.cvce.eu/content/publication/2010/10/27/93d25b61-6148-453d-9fa7-9e220e874dc5/publishable_en.pdf.
5. ↑ "The history and debate in Europe on a European Unemployment Benefit Scheme". http://www.upjohn.org/sites/default/files/euui/strauss.pdf.
6. ↑ "Improving Economic Stability in Europe: What the euro area can learn from the United States' Unemployment Insurance". https://www.swp-berlin.org/fileadmin/contents/products/arbeitspapiere/Paper_US_KS_neu_formatiert.pdf.
7. ↑ "A European unemployment insurance as a stabilization device - selected issues". http://ec.europa.eu/social/BlobServlet?docId=10437&langId=en.
8. ↑ "A euro-area wide unemployment insurance as an automatic stabilizer: Who benefits and who pays?". http://ec.europa.eu/social/BlobServlet?docId=12510&langId=en.
9. ↑ "Towards a genuine economic and monetary union". http://www.consilium.europa.eu/uedocs/cms_data/docs/pressdata/en/ec/134069.pdf.
10. ↑ "Feasibility and Added Value of a European Unemployment Benefit Scheme". https://www.ceps.eu/content/feasibility-and-added-value-european-unemployment-benefit-scheme.
11. ↑ "On the Design of a European Unemployment Insurance Mechanism". http://ademu-project.eu/wp-content/uploads/2017/05/Abraham_Brogueira-de-Sousa_Marimon_Mayr.pdf.
12. ↑ "Basic European unemployment insurance: Countering divergences within the Economic and Monetary Union". 29 September 2014. http://europa.eu/rapid/press-release_SPEECH-14-635_de.htm. Retrieved 5 August 2018.
13. ↑ "Germany's Scholz proposes Europe-wide unemployment insurance scheme". Reuters. 2018-06-09. https://www.reuters.com/article/us-eurozone-germany-scholz/germanys-scholz-proposes-europe-wide-unemployment-insurance-scheme-idUSKCN1J5077.

## External links

* Forum article in the journal Intereconomics
* Definition in The New Palgrave Dictionary of Economics

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