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1. 1
IlariaInBxl
CEPS_thinktank
Thinking ahead for Europe
Completing the European Economic and
Monetary Union with a European
Unemployment Benefits Scheme
Workshop 1: Towards a Fiscal Union
www.ceps.eu
ILARIA MASELLI
Research Fellow, CEPS

2. 2
What are we talking about?
• An unemployment benefits scheme
• An automatic stabiliser
• A budget for the eurozone/EU
• A European labour market policy
• A form of fiscal union
• A European welfare scheme

3. 3
Why a stabiliser?

4. 4
The economic rationale (I)
• In the EMU: monetary policy is gone and fiscal policy is
limited!
o …and can be pro-cyclical!!!
• Spillover effects & sub-optimal spending
o National UB become insufficient
• Labour markets rigidities
o Prices (= wages) don’t adjust easily
o Mobility limited

5. 5
The 1970s, 1990s and the 2010s
• 1970s > too forward looking
• 1990s > good idea…but
• Too many issues on the Maastricht table
• Technical issues: EMU budget EU budget?
• Reluctance to increase EU budget while putting limits
on national expenditures
• Shocks triggered by financial sector difficult to imagine
• Enlargement ahead
• 2010s > theoretical and empirical evidence come
together!

6. 6The economic rationale (II):
The Banking Union and
the Capital Markets Union
• The BU and CMU will reduce likelihood of large shocks
and provide the stabilization needed
• BU and CMU limited
• Shocks may have different nature than financial
• Financial integration can also generate instability
o Europe bank-dominated
o doom loop bank-sovereign
BU + CMU + autom. stabiliser
complements rather than substitutes

7. 7
Why an unemployment
insurance scheme?

8. 8
Other options
•Investment plan à la Juncker
•More regional policies
•An output gap scheme
•A GDP scheme
•A kurzarbeit scheme

9. 9
Why unemployment benefits scheme is
superior
•Quintessentially anti-cyclical
• Goes directly into the ‘right’ pocket
•Non-discretionary
•Easy to measure
• Based on head-count
• Data quickly available

10. 10
Not an easy but a necessary step!
“Further progress requires the manifestation of a
political will. This will is today uncertain and needs
to show itself and to fortify itself by action.
At a time when Europe finds itself confronted with
redoubtable dangers, under the name of “inflation”,
“massive balance of payments deficits” and
“unemployment”, the only reasonable way for the
member countries is to face together (…) these
perils”
Marjolin Report, 1975

11. 11
@IlariaInBxl
@CEPS_thinktank
Ilaria.Maselli@ceps.eu
www.ceps.eu
Bedankt!
Merci!
Thank You!