Attitudes towards euro area reforms: Evidence from a randomized survey experiment

Abstract

This paper provides insights into the determinants of euro area reform preferences by means of a randomized survey experiment in Germany. Respondents are confronted with a pro and a contra argument to reform proposals on a European Unemployment Benefit Scheme and a Sovereign Insolvency Procedure, respectively, with the contra argument being varied across respondents. Our results for the control group suggest that there is a low willingness to accept fiscal risk-sharing through common unemployment insurance, while a sovereign insolvency procedure aimed at strengthening market discipline is supported by a majority of the survey participants. Our randomized treatments highlighting specific potential adverse effects of the reforms lead to significant downward shifts in approval rates. Altruism, EU support, nationalism, political preferences and income are important predictors of support for the reform proposals. We also show that there is a striking contrast between the low level of support for transfers to other euro area member states and a broad acceptance of inner German transfers.