Converging Unemployment Insurance Schemes in the EU: Budgetary, Distributional and Stabilizing Effects Florian Buhlmann, Mathias Dolls, and Carla Krolage* *ZEW, University of Mannheim In cooperation with: Salvador Barrios, Viginta Ivaˇ skait˙ e-Tamoˇ si¯ un˙ e, and Virginia Maestri** **Joint Research Centre, B2 Fiscal Policy Analysis Unit, Seville 5th European User Conference for Microdata, 2017-03-02 Buhlmann, Dolls & Krolage (ZEW) Converging UI Schemes 2017-03-02 1 / 15
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Converging Unemployment Insurance Schemesin the EU:
Budgetary, Distributional and Stabilizing Effects
Florian Buhlmann, Mathias Dolls, and Carla Krolage**ZEW, University of Mannheim
In cooperation with:Salvador Barrios, Viginta Ivaskaite-Tamosiune, and Virginia Maestri**
**Joint Research Centre, B2 Fiscal Policy Analysis Unit, Seville
5th European User Conference for Microdata, 2017-03-02
Existing models (EUROMOD) allow for a simulation of unemploymentbenefits, but with several important restrictions:
Cross-sectional input data: lack of information on previous earnings andwork history
Rather rough simulation: precise calculation of monthly benefits, i.e. byassuming the maximum benefit duration in countries with varying benefitdurations
Back-of-the-envelope calculations cannot be applied to previously uncoveredpeople who become eligible under a reform
Impossibility of precisely distinguishing between short- and long-termunemployed
Detailed microsimulation model for 26 EU Member States’unemployment insurance systems
Based on 2012 longitudinal EU-SILC micro household data
Supplemented with LFS and EUROMOD data
Allows simulation of:I Precise individual gross monthly unemployment benefitsI Net benefits after taxation and withdrawal of other forms of
unemployment assistanceI Effect on coverage ratesI Gross and net budgetary costsI Distributional effects by income quintilesI Effect on inequality indicators
Reform scenarios in line with EU policy considerations:
Minimum standards in the baseline scenario:I Maximum qualifying to reference period ratio of 50%I Minimum duration 6 monthsI 50% net replacement rate for wages below 67% of average wages
Separate and joint analysis of reform scenarios
Sensitivity analyses with more generous reformsI Maximum qualifying to reference period ratio of 40%I Minimum duration 12 monthsI 60% net replacement rate for wages below 80% of average wages
Simulate the effects of macroeconomic shocksI How would the reformed UI systems react to a crisis?I Simulation of labor market shocks in line with the past financial crisis:
Use the magnitude of the 2009 shocksI Or: simulate a shock of the same size for all countriesI Contrast the responses of the status-quo and reformed systems