This paper develops a decomposition framework to study the importance of di erent stabilization channels of an unemployment re-insurance scheme for the euro area. The paper provides insights on the potential added value of a re-insurance scheme which crucially hinges on its ability to provide inter- regional smoothing. Running counterfactual simulations based on household micro data for the period 2000-16, the paper nds that on average 15-25 per cent of the income losses originating from rising unemployment in deep reces- sions would have been absorbed through interregional smoothing e ects. The results suggest that the interregional smoothing channel of the re-insurance scheme is economically as important as the intertemporal smoothing e ect of an average domestic unemployment insurance scheme in the euro area. The latter would have led to a cushioning e ect of 16-27 per cent of large unemployment shocks. The simulated re-insurance scheme would have been revenue-neutral at EA-19, but not at the member-state level. Average annual net contributions would have amounted to -0.1-0.1 per cent of GDP. No member state would have turned out as a permanent net contributor/recipient.