Federal Unemployment Reinsurance and Local Labor-Market Policies by Keith Kuester

Join us for this weeks Macroeconomics Research Seminar, Autumn Term 2023.

Keith Kuester, from the Institute for Macroeconomics and Econometrics at the University of Bonn, will present this weeks Macroeconomics seminar on Federal Unemployment Reinsurance and Local Labor-Market Policies.

Abstract

Consider a union of atomistic member states. Idiosyncratic business-cycle shocks cause persistent differences in unemployment. Private cross-border risk-sharing is limited. A federal unemployment-based reinsurance scheme can provide transfers to member states in recession, which helps stabilize local unemployment. Limits to federal generosity arise because member states control local labor-market policies. Calibrating the economy to a stylized European Monetary Union, we find that moral hazard puts notable constraints on the effectiveness of federal reinsurance. This is so even if payouts are indexed to member state’s usual unemployment rate or if the federal level pays only in severe-enough recessions.   

This seminar will be held on campus in the Economics Common Room at 1.30pm on Tuesday 14th November 2023. This event is open to all levels of study and is also open to the public. To register your place, please contact the seminar organisers.

This event is part of the Macroeconomics Research Seminar Series.