The redistributive and stabilising effects of an EMU unemployment benefit scheme under different hypothetical unemployment scenarios

The idea of a common unemployment benefit system for the European Monetary Union (EMU) has provoked increasing interest in both the political and academic spheres because of its potential to smooth fluctuations in income across member states and to strengthen income security for the unemployed. In this paper, we simulate two hypothetical negative employment shocks and make use of the microsimulation model EUROMOD to explore the implications for income protection of the introduction of an EMU unemployment insurance (EMU-UI) scheme, for a selected number of countries of the Monetary Union. Our results show that the EMU-UI has the potential to reduce the risk of poverty for those affected by the negative employment shock and to have an additional positive effect on within-country income stabilisation, although the effects of the EMU-UI vary considerably in size across the countries analysed.