Transcript Jacques Delpla - Toulouse School of Economics

A CONDITIONAL
UNEMPLOYMENT INSURANCE
MECHANISM ACROSS THE
EUROZONE
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Brussels. 20 February 2012
Presentation before the European Parliament
Jacques DELPLA (Professeur-associé Toulouse
School of Economics)
With Pierre-Olivier GOURINCHAS, UC Berkeley
NEED FOR CONDITIONAL MUNDELLIAN
TRANSFERS IN THE EUROZONE
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€ countries with negative shocks cannot bear 100% of
the shock, as no option to devalue or inflate away
We call for “Mundellian Transfers” to save the €,
analogous to US automatic Stabilizers
With strong & credible conditions: “no money without
reforms, no adjustment without money”
Mechanism design. Full of eco & pol incentives:
‘opt-ins’, ‘opt-outs’, finite duration. InterGovernmental scheme.
Net contributing countries have an incentive to
participate and can threaten to leave
Net receiving countries have to reform or leave the
Inter-Governmental scheme
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A EURO-WIDE CONDITIONAL
UNEMPLOYMENT INSURANCE
WITH THREE PILLARS
3
1ST) RESOURCES OF THE U/E INSURANCE
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2.
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Creation of a Eurozone wide Unemployment
Insurance Fund (€ Job Fund -€JF)
≈ 1% of each country’s GDP for u/e insurance
+ €-wide job training fund (0.5% of GDP)
With money coming out of existing national
social funds, on an annual basis
With maybe some of the EU budget money
(from structural funds)
All that money Managed by a European Labor
Agency (probably managed by the EC),
supervised by the European Parliament
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2ND) THE EUROPEAN LABOUR CONTRACT
Unique for the whole €-area
 Unique for all sectors
 Would be the (N+1) contract in each country
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Designed with full and genuine
Flexisecurity
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Designed by the European Commission and the EU
Council,
With help of successful countries (Scandinavia, cf.
former PM Rasmussen & Persson),
In consultation with EU labour and business unions
(but they have no veto)
Voted by the European Parliament
Northern countries will emphasize flexibility,
southern, security  Flexisecurity compromise
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3RD) THE CONDITIONAL UNEMPLOYMENT
INSURANCE
When hired, each worker has the option to sign
in for :
 National contract + national insurance (status quo)
 OR:
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European labor contract (Flexisecurity)
+ (national and €) u/e insurance
+ (national + €) job training
The company MUST propose both contracts
 The worker is completely free to choose any of the
two contracts. Respect for her preferences.
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PROPERTIES OF THE U/E € INSURANCE
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Idea : decentralize flexisecurity decision to the the
individual, as it is extremely difficult to pass at
national level. This by-passes political difficulties of
reforming national labor laws.
Transfers money from booming countries to depressed
areas, where it is most needed, and ONLY in case of
actual reform
NO MORAL HAZARD: No transfers without reform
Reforms with transfers.
Why would Germany or NL sign in?
Reduce u/e in Spain, PT and GR, which is now systemic for
the whole €-area
 Avoid massive political & social meltdown in GIIPS
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