A proposal for a federalized unemployment insurance mechanism for Europe

The ongoing crisis in the Eurozone, together with growing evidence of structural imbalances, points to a role for new institutions to support a more stable EMU structure. As is well established in the context of monetary union when business cycles are not synchronized, a system of fiscal transfers can support monetary union. Unemployment insurance (UI) is, in particular, a key component of fiscal crisis management. UI supports household incomes during downturns, and