TY  - RPRT
        AU  - Ignaszak, Marek
AU  - Jung, Philip
AU  - Kuester, Keith
        TI  - Federal Unemployment Reinsurance and Local Labor-Market Policies
        PY  - 2020/Nov/
        PB  - Institute of Labor Economics (IZA)
        CY  - Bonn
        T2  - IZA Discussion Paper
        IS  - 13886
        UR  - https://www.iza.org/publications/dp13886
        AB  - Consider a union of atomistic member states, each faced with idiosyncratic business-cycle shocks. Private cross-border risk-sharing is limited, giving a role to a federal unemployment-based transfer scheme. Member states control local labor-market policies, giving rise to a trade-off between moral hazard and insurance. Calibrating the economy to a stylized European Monetary Union, we find notable welfare gains if the federal scheme's payouts take the member states' past unemployment level as a reference point. Member states' control over policies other than unemployment benefits can limit generosity during the transition phase.
        KW  - unemployment reinsurance
KW  - labor-market policy
KW  - fiscal federalism
KW  - search and matching
        ER  -