Lessons from the American federal‐state unemployment insurance system for a European unemployment benefits system

Abstract

This article reviews practices in the United States (US) federal‐state unemployment insurance (UI) system regarding applicant eligibility, benefit generosity, benefit financing and emergency measures with the aim of revealing lessons for a possible European unemployment benefit system (EUBS) for European Union (EU) Member States. We overview the US system for UI and examine important areas of federal leadership. While the US system offers some good ideas for setting up an EUBS, there are also lessons in some shortcomings of the US experience. We overview existing national UI systems in the EU and review the debate on an EUBS in the EU. We identify areas of risk for individual and institutional moral hazard in a multi‐tiered UI system and give examples of monitoring methods and incentives to ameliorate such risks. We suggest approaches for gradual system development, encouraging lower‐tier behaviour, benefit financing, and responses to regional and system‐wide labour market crises.

Some Remarks on Actual Unemployment Insurance Schemes

“…The optimal benefit level has no particular time dimension within the first issue whereas the preliminary step in the optimal time sequence of benefits, that is the government's commitment to a stated level of discounted expected utility for the worker at time zero 19 , is simply a given, which acts as a constraint in the analytical constructions 17 Within different approaches many works have been developed on these issues. Let me mention the recent analyses in Dolls, Fuest, Neumann, andPeichl (2018), Fischer (2017), O'Leary, Barnow, and Lenaerts (2020). Clearly, these issues raise a large set of questions.…”

The Introduction of an eu Unemployment Reinsurance System: Income Protection and Maintenance of Consumption

“…Such movement helps to stabilize economic activity in the future. In the us, such a system has been in place for a long time and works well in times of recession, acting as an automatic stabilizer (Chimerine, Black, and Coffey 1999;Asdrubali, Sorensen, and Yosha 1996;us Department of Labor 2012;O'Leary, Barnow, and Lenaerts 2020).…”

Why the Unemployment Insurance Program Needs to Be Reformed

“…9. This discussion is drawn from O'Leary and Barnow (2016). In January 2018, California and the Virgin Islands were still repaying loans to the Treasury, and Michigan, Nevada and Pennsylvania were still repaying other loans or bond debts (USDOL 2018).…”