Abstract:
A few months in, it is still hard to grasp the scale
and scope of COVID-19’s global impact. A third of the world
population is under some sort of “lockdown.” All the while,
a second crisis, in the form of an economic recession, is
underway (Schwab and Vanham, 2020). During the
recession, European Union (EU) members did not use fiscal
policies to ease the recession, while the reinsurance system
in the case of unemployment would achieve exactly this, as
it acts as an automatic stabilizer. The response to
unemployment in the great recession and subsequent events
related to the European debt crisis has been very
heterogeneous across Europe and in population groups. This
study examines stabilizing power and efficiency of presented
unemployment reinsurance systems (URS EU). We find that
the statutory contribution rate for unemployment insurance is
sufficiently high only in a small part of the EU. Only certain
insurance systems are sustainable. This paper demonstrates
that the need for an automatic stabilizer, such as the
reinsurance in the case of unemployment, has shown even
more necessary. Through this paper and these
recommendations, this study hopes to encourage institutional
reforms, especially in the euro area, as the monetary union
reduces macroeconomic stabilization policies at national
level. We believe that the URS EU would represent a possible
solution to the problems outlined in the paper.
