06 Jan 2015

Reinsurance of National Unemployment Benefit Schemes

Miroslav Beblavy / Daniel Gros / Ilaria Maselli

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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. 

This study has been prepared at the request of the European Commission, Employment, Social Affairs and Inclusion DG. VT/2013/133

Miroslav Beblavý is a Member of the Slovak Parliament (since 2010) and a Senior Research Fellow at CEPS. Daniel Gros is Director of CEPS. Ilaria Maselli is a researcher in the Economics and Social Welfare Policies unit at CEPS.