Federal Unemployment Reinsurance and Local Labor-Market Policies

Optimal regional labor market policies

“…The model abstracts from agglomeration forces that would induce a particular distribution of workers over regions over time and takes population size per region as given and fixed. Our model builds on a steady state version of Jung and Kuester (2015) and Ignaszak et al (2020), where we introduce regional heterogeneity. 12 Time is discrete and continues forever.…”

“…With these assumptions in place, it follows from arguments in Jung and Kuester (2015) and Ignaszak et al (2020) that an optimal set of instruments that decentralizes the constrainedefficient allocation of the local planner's solution can be characterized by the following proposition:…”

Risk sharing in currency unions: The migration channel

“…The latter finding is consistent with results of the European Commission (2016), while our estimates for the US suggest that the role of transfers for risk sharing declined somewhat, relative to the earlier estimate of 13 percent obtained by ASY. Still, the larger role of transfers for risk sharing across US states seems noteworthy in light of the efforts in Europe to increase risk sharing via a common budget and/or a union-wide unemployment reinsurance scheme (e.g, Ignaszak et al 2020;Nettesheim 2020).…”