Newsletter October 2018

The Centre for European Economic Research (ZEW), the University of International Business and Economics (UIBE), and the Alexander von Humboldt Foundation jointly organised this year's Beijing Humboldt Forum in the Chinese capital on 15–16 September 2018. Within the framework of the event, ZEW organised a session entitled “Assessing the Economic Impact of Environmental and Innovation Policies in China and Europe”. During the session, ZEW researchers engaged in a discussion with international guests regarding the role of environmental, energy and innovation policies for the economic development of the EU and China.

In April of 2018, the Federal Constitutional Court declared Germany’s procedure for assessing property tax unconstitutional and ordered the government to adopt policy reforms by the end of 2019. So far, however, politicians have been slow to propose new legislation. Prof. Dr. Sebastian Siegloch, head of ZEW’s Research Department “Social Policy and Redistribution” and professor of economics at the University of Mannheim, argues that property tax assessments should be based on current market values.

How shall we allocate resources without using money, such as public school places, or kidneys available for transplantation? On 12 and 13 October 2018, around 30 international researchers attended the 15th Matching in Practice workshop at ZEW in Mannheim to discuss theoretical and applied approaches to make markets without money fairer and more efficient.

ZEW was happy to organise a Lunch Debate, entitled “Beyond Horizon 2020: Translating Public Research into Innovation“, at the Representation of the State of Baden-Württemberg in Brussels. With the ninth EU Framework Programme “Horizon Europe” currently being subject of extensive discussion at European level, the event was met with great interest due to its high topicality.

Digital prosperity for all: an update of the social market economy is possible. The digital revolution is currently in full swing, transforming both our economy and our society. This is evident from the wide variety of apps on our smart phones and the increasing digitalisation of our workplaces. Business models are having to change at break-neck speeds to keep up with these complex markets and new internet companies.

As the end of 2018 approaches, the UK and the European Union still need to negotiate the details of Brexit. However, any kind of agreement still seems a long way off. It is of the utmost urgency that some of these details be clarified – EU citizens living in the UK, British citizens living in Europe as well as businesses on both sides of the Channel have been waiting long enough.

Alongside new technologies such as electric mobility and services such as ride-sharing or carpooling, targeted policy instruments such as road pricing schemes need to be developed further in order to reduce emissions in the transport sector. This is a key result of the ZEW workshop which took place on 13–14 September 2018 in Mannheim and featured 35 experts from the realms of academia, politics and business practice. At the same time the workshop marked the conclusion of the research project “Carbon-Neutral Courier Services” (CO2URIER) funded by the Federal Ministry of Education and Research.

The Mannheim Centre for Competition and Innovation (MaCCI), a joint initiative of the Centre for European Economic Research (ZEW) and the University of Mannheim, is pleased to announce its 2019 annual conference in Mannheim on 28–29 March 2018. The conference provides a platform for exchange and discussion on topics in competition- and innovation-related research. Researchers are invited to submit papers from all fields of competition law and economics. Theoretical and empirical papers as well as case studies are welcome. We especially encourage legal experts to submit contributions with a focus on EU competition law and/or comparative competition law. Please submit full papers as well as extended abstracts in PDF format to macciannual2019@zew.de no later than 15 December 2018.

Professor Melanie Arntz, deputy head of the Research Department “Labour Markets and Human Resources” at the Centre for European Economic Research (ZEW), Mannheim, was appointed professor of economics with a focus on labour markets at Heidelberg University. The appointment, made jointly by ZEW and Heidelberg University, became effective on 1 October 2018. The professorship is funded by the Leibniz Programme for Women Professors of the Leibniz Competition 2018.

As of today, Professor Sebastian Siegloch will be leading the new Research Department “Social Policy and Redistribution” at the Centre for European Economic Research (ZEW), Mannheim. The role as research department head is combined with a professorship in the economics department at the University of Mannheim.

A high-level delegation of the administration of Mannheim’s twin city, Chongqing, visited ZEW on 25 October 2018. The reason for their stay in Mannheim was the planned opening of a direct train connection between Mannheim and Chongqing, which is the largest city in the People’s Republic of China.

Dr. Marco de Pinto was a visiting researcher in ZEW’s Research Department “Labour Markets and Human Resources” from 15 to 17 October 2018. He works as a research assistant at the Institute for Labour Law and Industrial Relations in the European Union (IAAEU) and in the department of Personnel Economics at the University of Trier. His research focuses on labour market economy, personnel and education economics, as well as international trade. During his visit, he worked with ZEW researchers on the research project Local Labour Markets: The Causes and Consequences of Spatial Differences in Labour Market Outcomes Across Cities in France and Germany.

On 19 October 2018, a group of students studying federal defence administration at the Federal University of Applied Administrative Sciences visited ZEW. The university of applied sciences, which is located in Mannheim, aims to prepare the future administration professionals for their work in defence administrations on behalf of the federal government.

Professor Van Anh Vuong was a visiting researcher in ZEW’s Research Department “Economics of Innovation and Industrial Dynamics” from 8 to 12 October 2018. From 2012 to 2018 she worked as a junior professor at the University of Cologne. Since October 2018 she has been an assistant professor at Maastricht University. Her research focuses on empirical industrial organisation, innovation economics and applied microeconomics. During her visit, she worked with ZEW researcher Professor Bettina Peters and ZEW Research Associate Professor Mark Roberts from Pennsylvania State University on two joint research papers that analyse the long-term returns that companies generate from investments in research and development (“Firm R&D Decision and Export Market Exposure”) and in human capital (“Measuring Long-Run Benefits of Firm’s Innovations and Human Capital Investments”).

The US tech giants Apple, Google, Facebook and Amazon have been on a buying spree for the past few years. In 2009, these firms acquired fewer than ten companies in total. By 2010, their combined acquisitions had quintupled and since then each has averaged around twenty per year. In the past decade, they bought a total of 313 companies, averaging 7.8 per year. Of them, Google has stood out, outperforming Apple, Facebook and Amazon every year except 2017, for a total of 140 acquisitions. The others have had fewer than half as many each. These are the findings of studies carried out by the Centre for European Economic Research (ZEW), Mannheim, on the basis of the Zephyr database of Bureau van Dijk.

The number of mergers and acquisitions (M&As) involving German firms stabilised over the first half of 2018, after previously witnessing a decline. 2018 began – as is common at the beginning of the year – with a large number of transactions in January. After a modest spring, activities picked up again in the summer. This development is clearly discernible in the current ZEW-ZEPHYR M&A Index, which tracks the number of M&A transactions involving German companies on a monthly basis. These are the findings of studies carried out by the Centre for European Economic Research (ZEW), Mannheim, on the basis of the Zephyr database of Bureau van Dijk.

At its meeting today, the Governing Council of the European Central Bank (ECB) did not make any changes to the ECB’s interest rate policy, nor did it take a final decision on the phasing out of its asset purchases scheduled for the end of this year. Professor Friedrich Heinemann, head of the Research Department “Corporate Taxation and Public Finance” at the Centre for European Economic Research (ZEW), offers his view on the matter.

The European Commission rejected Italy’s draft 2019 budget on the grounds that it violates European stability rules. This decision marks the first time in the history of the European Union that a budgetary plan of a Member State is rejected by the EU. Professor Friedrich Heinemann, head of the ZEW Research Department “Corporate Taxation and Public Finance” at the Centre for European Economic Research (ZEW) in Mannheim has commented on this issue.
 

In the most recent survey for October (02/10/2018–17/10/2018), expectations regarding the Chinese economy rose again. The CEP Indicator, which reflects the expectations of international financial market experts regarding China’s macroeconomic development over the coming twelve months, has climbed 14 points to a current reading of minus 2.0 points (September 2018: minus 16.0 points). The indicator thus still remains well below the long-term average of 3.9 points. Falling 5.7 points to a level of minus 3.9 points, the assessment of the current economic situation in China was more negative than the previous month.

As a result of a large-scale police reform, the state of Baden-Württemberg closed around 40 per cent of municipal police stations. In a recent study carried out by the Centre for European Economic Research (ZEW) in Mannheim, researchers investigated in which ways the shut-down of police stations affected the local crime rate. According to the findings of the study, the closure of police stations led to a strong increase in both car thefts and domestic burglaries in the respective municipalities. What is more, the study shows that the further away a municipality is from a police station the higher is the crime rate in that municipality.

The ZEW Indicator of Economic Sentiment for Germany dropped to a level of minus 24.7 points in October 2018. The indicator has thus reached the same low-point as in July of this year, being at its lowest reading since August 2012. Also, with 14.1 points, the extent of the month-to-month decline is remarkably strong. Only once in the recent past did the indicator fall more strongly, namely after the Brexit vote in Great Britain in July 2016. The indicator’s current value is far below the long-term average of 22.8 points. The assessment of the current economic situation in Germany decreased by 5.9 points, leaving the corresponding indicator at 70.1 points.

The productivity measured in the mechanical engineering sector has experienced a decrease in the years after the financial and economic crisis of 2008/09 – despite high capacity utilisation, growing profits and employment being at a record high. This paradoxical development cannot be attributed to one single cause, but rather to the interplay of several factors, including initial investments in digitalisation, which only pay off at a later stage, as well as statistical effects resulting from the increasing internationalisation in the mechanical engineering sector.

In addition, price increases tend to be overestimated in official statistics, which in turn leads to productivity growth being underestimated. Finally, the growing share of services within the mechanical engineering sector also plays a considerable role in this development.

The level of education among asylum seekers who recently arrived in Germany in many cases differs significantly from the average level of schooling in their country of origin. On average, male asylum seekers from the Middle East and Africa have around 1.6 more years of schooling than men of the same age in their country of origin. They therefore generally belong to a more highly educated class in their homeland. However, compared to young German men, asylum seekers tend to have considerable gaps in their education, making intensive further training necessary to help them integrate more easily into the German labour market. These are the findings of a recent study carried out by the Centre for European Economic Research (ZEW) in Mannheim.

European policymakers need to do more to encourage citizens to identify with Europe. Pan-European political consciousness could be encouraged by having citizens vote for European party lists rather than national party lists in the European elections. An EU Citizens’ Assembly should serve as a platform to discuss specific political issues and propose potential solutions. Europe could also raise its profile overseas through shared EU embassies and consulates. These are some of the main policy recommendations from a new study conducted jointly by the Centre for European Economic Research (ZEW), Mannheim, and the ifo Institute, Munich, for the EconPol Europe research network.

“High Five”, the project developed by the Fritz-Erler-Schule from Pforzheim impressed the audience at the final of the high school competition YES! – Young Economic Summit in Hamburg and won the vote for the best solution at this year’s competition. The student team was assisted by Holger Stichnoth, deputy head of the Research Department “Social Policy and Redistribution”at the Centre for European Economic Research (ZEW) in Mannheim. As in the previous year, a team mentored by ZEW distinguished itself from all student teams in the Germany-wide competition.

Our publications are available to download in PDF format. PDF files can be viewed using, among others, Acrobat Reader, which you can download for free at https://acrobat. adobe. com/us/en/acrobat/pdf-reader. html

Bastian Krieger, Georg Licht and Maikel Pellens
New Perspectives in European Innovation Policy

Leonardo Maria Giuffrida; Gabriele Rovigatti
Can the Private Sector Ensure the Public Interest? Evidence from Federal Procurement

Sebastian Blesse; André Diegmann
Police Reorganization and Crime: Evidence from Police Station Closures

Klaus Peter Gugler; Sven Heim; Maarten Janssen; Mario Liebensteiner
Market Liberalization: Price Dispersion, Price Discrimination and Consumer Search in the German Electricity Markets

Paul Muller; Wolfgang Habla
Experimental and Non-Experimental Evidence on Limited Attention and Present Bias at the Gym

Martin Lange; Friedhelm Pfeiffer
The Human Capital Selection of Young Males Seeking Asylum in Germany

Friedhelm Pfeiffer; Holger Stichnoth
Fiskalische und individuelle Nettoerträge und Renditen von Bildungsinvestitionen im jungen Erwachsenenalter (Fiscal and Individual Net Returns and Rates of Return from Investments in the Education of Young Adults)

Holger Bonin, Sebastian Camarero Garcia, Max Lay, Vivien Liu, Carina Neisser, Margard Ody, Lukas Riedel, Holger Stichnoth, Martin Ungerer and Nils Wehrhöfer
Machbarkeitsstudie und Ableitung von Forschungsfragen zu Bedeutung, Inanspruchnahme und Verteilungswirkungen von gesellschaftlich notwendigen Dienstleistungen (Feasibility Study and Derivation of Research Questions on the Significance, Use and Distribution Effects of Essential Social Services)

STEM Qualifications: Determinants of Educational Decisions and Occupational Consequences

Understanding Public Attitudes and Political Preferences in the Context of Automatization of the Labor Force

Speaker: Prof. Dr. Udo Kreickemeier (University of Göttingen)
Location of the event: ZEW, Mannheim

Location of the event: ZEW, Mannheim

Location of the event: Kloster Eberbach, Eltville im Rheingau

Speaker: Prof. Dr. Peter Cramton (University of Cologne and University of Maryland)
Location of the event: ZEW, Mannheim

Location of the event: ZEW, Mannheim

Location of the event: University of Mannheim

Speaker: Prof. Dr. Isabel Schnabel (German Council of Economic Experts and University of Bonn)
Location of the event: ZEW, Mannheim

Speaker: Klaus Fröhlich (BMW Group, Munich)
Location of the event: ZEW, Mannheim

Picture Credits: news article of 30 October 2018: UIBE, press release of 30 October 2018: iStock.com/maxsattana, press release of 24 October 2018: iStock.com/btgbtg, news article of 22 October 2018: Eric Berghen, press release of 22 October 2018: iStockphoto.com/Chalabala, press release of 15 October 2018: fotolia.com/Kristina Greke, press release of 10 October 2018: iStock.com/csakisti, press release of 10 October 2018: @PeskyMonkey, press release of 1 October 2018: ZBW
 
All further pictures: ©ZEW