Abstract
The system of unemployment insurance (UI) used in the United States has often been cited as a model for Europe. The American model illustrates that it is possible to create and maintain a UI system based on federal-state co-financing that intensifies during economic crises and thus reinforces protection and stabilisation. Central requirements and conditional funding can improve the aggregate protection and stabilisation capacity of the system. However, the architecture of the US system financially incentivises states to organise retrenchment of their own efforts for UI, which in turn leads to a divergence of benefit generosity and coverage levels. During the Great Recession, the federal government mitigated these incentives for retrenchment through minimum requirements attached to federal financial intervention. With regards to the European unemployment re-insurance system debate, the US experience implies both positive and encourageing conclusions and cautionary lessons.