Is the EU evolving towards a Re-Insurance Union? The creation of SURE, an EU financial tool to support national short-time work (STW) schemes in the midst of the pandemic, has revitalized debates on ...fiscal stabilizers as a means to counter economic downturns and protect jobs within the European Union. Drawing from document analyses and 17 interviews with EU and national stakeholders, this study explores the politics underpinning SURE’s adoption following a decade of heated and unsuccessful debates on the European Unemployment Reinsurance Scheme (EURS). Through the lens of ‘purposeful opportunism’, the article illustrates how the European Commission leveraged prior EURS insights and the emerging consensus on STW schemes to craft SURE in a way which addressed national concerns about EU-wide welfare harmonization, while positioning the EU as a holding environment for national welfare states. Looking ahead, making SURE a permanent ‘second line of defence’ against macroeconomic shocks could contribute to further substantiating new, EU-wide, social rights codified in the European Pillar of Social Rights.
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A means-tested pension system has a distinct feature that tailors the level of pension benefits according to individual economic status. In the context of population aging with widening gaps in life ...expectancies, we show that this feature generates an automatic mechanism that (i) mitigates the pressing fiscal cost of an old-age public pension program (fiscal stabilization device) and (ii) redistributes pension benefits to those in need with shorter life expectancies (redistributive device). To evaluate this automatic mechanism, we employ an overlapping generations model with population aging. Our results indicate that this novel mechanism plays an important role in containing the adverse effects of population aging on the fiscal costs and enhancing the progressivity of a pension system. More pronounced aging scenarios further strengthen the role of this mechanism. A well-designed means test rule can create a sufficiently strong automatic mechanism to keep public pensions sustainable and progressive under population aging.
•We model a means-tested age pension in the context of population aging.•The means test’s inbuilt mechanism enhances fiscal sustainability as populations age.•This mechanism is stronger, the greater the aging of the population.•The means-test redistributes pensions towards those with lower skills and longevity.•These mechanisms are demonstrated in small theoretical and large calibrated models.
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GEOZS, IJS, IMTLJ, KILJ, KISLJ, NLZOH, NUK, OILJ, PNG, SAZU, SBCE, SBJE, UILJ, UL, UM, UPCLJ, UPUK, ZAGLJ, ZRSKP
The paper offers a conceptual and methodological examination of the Reference Social Index (RSI) in Romania, which has been brought back to our attention, after a 10-year period during which its ...value did not change. The lack of political stability and, sometimes, the irresponsibility of governing parties create the risk of deviating the value of RSI, established by political decision, from the economic, social, and moral perspectives, and the support with which this indicator is invested. In considering the consequences generated by the possible arbitrary situation in setting the RSI value, it is necessary in the near future to identify a methodological anchor for the dynamic adjustment of the RSI value, avoiding the incidence of the political factor, that is, of arbitrariness. In this paper, a relevant macro-economic indicator for anchoring the RSI will be identified, so that its variation can be done automatically (via an automatic stabilization mechanism) without the circumstantial intervention of the political factor.
Understanding the functionality of fiscal policies, as well as its fundamental role in economic balancing, these are important aspects in terms of protecting and developing the business environment ...with obvious effects on social life. This study delves into the heterogeneity of fiscal policies to create a delimiting framework for them. The two types of fiscal policies, the discretionary or deliberative fiscal policy and the fiscal policy that act as an automatic stabilizer, were debated and detailed. The characteristics of the two types of policies are offered the way of using government revenues and expenditures as fiscal instruments. Thus, deliberative fiscal policies use instruments in directions strictly defined by the government in the sense of economic expansion or coercion. In contrast, fiscal policies that act as an automatic stabilizer do not require government intervention, acting by increasing the number of payments in times of recession and reducing them in times of economic expansion. Automatic stabilizers operate on the basis of state regulations, although their nature, size and effect have not yet been well defined in the empirical literature. The overall picture obtained in this study by researching the types of fiscal policies has allowed us to understand their functionality and the effects they can produce in the economy.
The role of socio-economic stabilization mechanisms under the economic growth is considered. Various approaches to the classification of automatic stabilizers are discussed. Some tax and social ...stabilizers under the economic growth period of 2000–2008 in Russia are analyzed. Some new global challenges and transformation opportunities of social and economic stabilizers in present-day Russia are described.
The paper presents some theoretical arguments regarding the issue of inequalities between individuals, inequalities which inevitably appear in the structure of any society and which can be analyzed ...on the base of a principle known and widely debated in the literature, the principle of difference and attenuated / solved by implementing automatic stabilizers in the area of control of the application of social justice. Thus, from the perspective of the author and the theme of the paper, the concepts of social justice with its two categories of commutative justice and distributive justice, elements of the theory of justice as equity, the Rawlsian concept of the principle of difference, the concept of automatic stabilizer in social justice. We consider that the design of an automatic stabilizer in the field of social justice and especially in the sphere of social distribution justice brings with it the desirability of avoiding the influence of the political factor in the decision to adjust the mechanism of distribution of the economic product of society.
CYCLICALITY OF THE U.S. SAFETY NET Bitler, Marianne P.; Hoynes, Hilary W.; Iselin, John
National tax journal,
09/2020, Volume:
73, Issue:
3
Journal Article
Peer reviewed
Open access
In this paper, we explore the cyclicality of the U.S. safety net over the 2000s through the economic peak in February 2020 before the onset of the COVID-19 crisis. We compare the effects of ...means-tested programs with those of social insurance programs, separately and combined. We find, on a per capita basis, Unemployment Insurance (UI) is by far the most cyclical, particularly when fully funded federal extensions are included. A 1-percentage-point increase in the unemployment rate leads to a 17 percent increase in monthly real UI spending. Overall, the social insurance programs provide an additional $31 (2019$) in per capita real spending for each percentage point increase in the annual unemployment rate, while the means-tested programs provide a statistically insignificant $8.50 per capita for each percentage point increase in unemployment. The means-tested programs without SSI provide a significant $12 for each percentage point increase in the unemployment rate. Thus, the parts of the means-tested safety net that can respond quickly are also providing modest countercyclical stabilization. We conclude by speculating what this means for the current response to COVID-19.
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In the context of a prototypical New Keynesian model, this paper examines the theoretical interrelations between two tractable formulations of progressive taxation on labor income versus (i) the ...equilibrium degree of nominal-wage rigidity as well as (ii) the resulting volatilities of hours worked and output in response to a monetary shock. In sharp contrast to the traditional stabilization view, we analytically show that linearly progressive taxation always operates like an automatic destabilizer which leads to higher cyclical fluctuations within the macroeconomy. We also obtain the same business cycle destabilization result under continuously progressive taxation if the initial degree of tax progressivity is sufficiently low.
Previous research has shown that in the context of a prototypical New Keynesian model, more progressive income taxation may lead to higher volatility of hours worked and total output in response to a ...monetary disturbance. We analytically show that this business‐cycle destabilization result is overturned within an otherwise identical macroeconomy subject to impulses to the household's utility formulation. Under a continuously or linearly progressive fiscal policy rule with the symmetric‐equilibrium tax burden unchanged, an increase in the positive level of tax progressivity will always raise the degree of equilibrium nominal‐wage rigidity, and thus serve as an automatic stabilizer that mitigates cyclical fluctuations driven by preference shocks.
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FZAB, GIS, IJS, KILJ, NLZOH, NUK, OILJ, SBCE, SBMB, UL, UM, UPUK
This paper analyses the trends of general government expenditures in the European Union. Government expenditure has increased considerably in all industrialized countries since 1870. Although this ...increase has not been equal in all countries, it is nevertheless remarkable that despite institutional differences, growing public spending has been a general phenomenon. The long-term trends of general public spending in the European Union shows us that, after a short period of decreasing general government expenditure, any external economic shock might significantly increase public spending. During the analysed time periods the highest share of public spending is devoted to social protection. Well-functioning systems of social protection increase spending in times of recession, and scale it back as the economy recovers, therefore the welfare state can operate as an effective “automatic stabilizer”. The paper also tests which EU member states’ welfare systems have been able to function as an automatic stabilizer.
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DOBA, IZUM, KILJ, NUK, ODKLJ, PILJ, PNG, SAZU, UILJ, UKNU, UL, UM, UPUK
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