Reinsurance of National Unemployment Benefit Schemes. CEPS Working Document No. 401, 6 January 2015

Beblavý, Miroslav and Gros, Daniel. and Maselli, Ilaria (2015) Reinsurance of National Unemployment Benefit Schemes. CEPS Working Document No. 401, 6 January 2015. [Working Paper]

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Abstract

This study is a contribution to the debate around the creation of an unemployment insurance scheme for the EU/euro area by proposing an alternative mechanism to the Europeanisation of national insurance schemes. The authors make the case for a reinsurance mechanism and show that such a system delivers, for a small average contribution, large shock-absorption capacities. At the same time, due to a threshold issue, it is not suitable for EU-level absorption of small national shocks. It is rather meant to deliver a large punch once activated, which should occur only in case of MAJOR events for the labour market. Had such a scheme been in place in the EU during the period 2000-2012, it would have been triggered 40 times.

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