Newsletter June 2016

This year's ZEW Economic Forum will focus on the topic "New Rules for the Digital Economy". The event brings together a number of high-profile experts to discuss the extent to which competition policy is an adequate instrument to address the growing market power of large corporations in the digital economy, on both a national and international level.

ZEW President Achim Wambach views the UK's decision for a Brexit as a turning point for Europe: "The UK will now enter into lengthy negotiations with the EU in order to maintain the benefits of a free trade area. The decision for a Brexit is likely to boost eurosceptic forces in other EU countries. The EU must therefore react. What is needed is a greater concentration of the EU Commission on its role as a 'guardian of the treaties'. Decision-making powers should be partly shifted back to the national parliaments. We will see a multi-speed Europe."

On June 6 and 7, 2016, the Centre for European Economic Research (ZEW), together with the Mannheim Centre for Competition and Innovation (MACCI) and the University of Mannheim's Institute for Small Business Research (Institut für Mittelstandsforschung, ifm), hosted the "Third International Conference on the Dynamics of Entrepreneurship" (CoDE). The two-day event enabled the more than 80 participants to exchange findings from current research relating to entrepreneurship.

A Tax-Financed Model Could Make the Pension System Sustainable
Almost half of all Germans retiring after 2030 will receive pension benefits placing them below the poverty line. This is a dour prospect, particularly when considering increasing life expectancy. Calls for the reform of the pension system have thus been growing louder. ZEW economist Andreas Peichl argues that the options for placing the German pension system on sound footing are limited. For Peichl, there is a need to ensure greater balance between young and old, as well as a more socially just distribution of burdens.

The day of decision is just around the corner. Currently, the odds are against a UK departure from the EU, at least for British bookies. Yet whatever the result of the vote, the Brexit referendum has cast a harsh light on the future of the European Union. Euroscepticism is on the rise in many countries, including Germany, where critical voices have been gaining traction.

The EU Commission's aim in establishing a Capital Markets Union (CMU) is to fully implement a single capital market by 2019. Is this even possible in the absence of a banking and fiscal union? And how is this compatible with the European Central Bank's (ECB) current policy of low interest rates and quantitative easing? These are some of the questions discussed at the ZEW Lunch Debate at the Representation of the State of Baden-Württemberg to the European Union in Brussels on June 15, 2016.

In his presentation prior to the discussion, Professor Sascha Steffen, financial economist at the Centre for European Economic Research (ZEW), pointed out that a CMU requires government bonds with a risk-free status.Without a banking and fiscal union a further European market integration would be infeasible, Steffen said – and the sovereign debt crisis would turn into a bottomless pit.

On June 3 and 4, 2016, ZEW hosted the fourteenth international conference, "The Economics of Information and Communication Technologies", thereby once again making a considerable contribution to this field of research. Around 70 participants, among them numerous renowned researchers, discussed scientific papers applying theoretical or empirical approaches to study the increasing digitalisation. The conference has now become an established event in the calendar of economists whose research focuses on information and communication technologies. Indeed, the event is now regularly funded, as was the case this year, by the German Research Foundation (DFG).

Dr. Daniel Osberghaus, researcher at the Mannheim Centre for European Economic Research (ZEW), analyses the economic consequences of climate change, with flood prevention being one of his fields of interest. In regard to the growing flood danger in Germany, he comments, "After the last days' devastating heavy rain incidents in various parts of Germany, the first demands for public financial aid for affected households have emerged. Surely, such aid is important for the affected persons. They do not, however, constitute a long-term solution for flood risks, which are likely to grow further due to the climate change. Instead, the government should rather create financial incentives for citizens to take private precautions, and local authorities should refrain from designating potential flood areas as building land. According to ZEW research findings, a mandatory insurance against flood damage might also be a reasonable solution."

The Centre for European Economic Research (ZEW) is pleased to announce the eighth interdisciplinary conference of the Leibniz Network on Real Estate Markets and Capital Markets (ReCapNet) in Mannheim on November 3 and 4, 2016. The conference is open to all researchers interested in the relationships between real estate markets and capital markets. We welcome contributions from the perspectives of real estate finance and economics, concentrating on issues related to behavioural real estate. More potential topics are listed in the call for papers. Submissions on these topics or other aspects of real estate markets and capital markets are encouraged. Please submit full papers in PDF format to conference@recapnet.org no later than July 15, 2016.

The Centre for European Economic Research (ZEW) in Mannheim is pleased to announce a workshop on the assimilation and integration of immigrants on October 13 to 14, 2016. The aim of the workshop is to bring together international researchers in the field of migration research in order to present and discuss recent empirical, theoretical and policy-oriented research in this area. Scholars who wish to attend the workshop are invited to submit a full paper version (preliminary versions are welcome) and a CV no later than August 1, 2016, to migration2016@zew.de.

Professor Michael (Xiaoquan) Zhang, PhD, was a visiting researcher at ZEW's Research Department "Information and Communication Technologies" from June 2 to 6, 2016. He is Associate Professor at the Hong Kong University of Science and Technology. His research interests lie in the creation, dissemination, and processing of information in business and management contexts. During his stay, Michael Zhang participated in the 14. ZEW Conference on The Economics of Information and Communication Technologies, presenting a paper on the question if individuals' adoption behaviour always creates social contagion in online social networks. Furthermore, he worked together with ZEW researchers on a paper about the effect of job displacement on online activities of individuals, among others voluntary content generation in Wikipedia.

Yuya Ikeda was a visiting researcher at the ZEW Research Department "Industrial Economics and International Management" from May 31 to June 2, 2016. He is researcher at the National Institute of Science and Technology Policy (NISTEP) in Tokyo and is responsible for the Japanese National Innovation Survey. His research interests lie in the fields of innovation economics and innovation behaviour of enterprises. During his stay, Yuya Ikeda examined together with ZEW researchers the relationship between international market orientation and innovation achievements in small and medium-sized enterprises (SME) in comparison between Japan and Germany.

Professor Jens Horbach was a visiting researcher at the ZEW Research Department "Industrial Economics and International Management" on June 9 and 10, 2016. He is Professor of Economics at the Faculty of Business of the University of Applied Sciences Augsburg. His research interests lie in the fields of environmental innovation, the innovation behaviour of enterprises, and environmental and energy policy. During his stay at ZEW, Horbach analysed the determinants and effects of environmental innovations, using data of the Mannheim Innovation Panel (MIP).

Downloading free apps goes hand in hand with the risk of granting unrestricted access to one’s personal data to third parties. A current study carried out by the Mannheim Centre for European Economic Research (ZEW) has shown the degree to which mobile applications are able to infringe on users' privacy rights in order to collect information about their behaviours, and the effect this has. The study has analysed the free apps that were available in the Google Play Store in 2012. The study has found that every second free app has access to sensitive information.

Expected developments in German transport markets, in terms of both transport volumes and price developments, now show a clear turnaround since the pessimistic expectations seen in the first quarter of 2016. The sharp decline in transport volumes seems to be over and price expectations have stabilised. Experts even expect to see price rises in air, sea and road freight markets. These are the findings of the Prognos/ZEW Transport Market Barometer (TransportmarktBarometer) for the second quarter of 2016.

In this quarterly survey, Prognos AG, Basel, and the Mannheim Centre for European Economic Research (ZEW) survey approximately 250 top executives from the transport and loading industry about their expectations for the development of transport volumes and prices on a six-month horizon.

Economic expectations for Central and Eastern Europe including Turkey (CEE region) have improved in June 2016 for the second consecutive time. In the current survey, the ZEW-Erste Group Bank Economic Sentiment Indicator for the CEE region has climbed by 11.2 points to a level of 15.8 points. The ZEW-Erste Group Bank Economic Sentiment Indicator for Central and Eastern Europe reflects financial market experts’ expectations for the CEE region on a six-month time horizon. The indicator has been compiled on a monthly basis together with further financial market data by the Mannheim Centre for European Economic Research (ZEW) with the support of Erste Group Bank, Vienna, since 2007.

The ZEW-CS-Indicator for the economic sentiment in Switzerland has increased slightly. With an improvement by 1.9 points, the indicator reaches a reading of 19.4 points in June 2016. Economic expectations thereby continue the upward trend already witnessed in Q2 2016. In June, Swiss economic expectations reached their highest assessment balance since February 2014. The ZEW-CS-Indicator reflects the expectations of the surveyed financial market experts regarding the economic development in Switzerland on a six-month time horizon. It is calculated on a monthly basis by the Mannheim Centre for European Economic Research (ZEW) in cooperation with Credit Suisse (CS), Zurich.

The ZEW Indicator of Economic Sentiment for Germany has increased in June 2016. The index has improved by 12.8 points compared to the previous month, now standing at 19.2 points (long-term average: 24.4 points)."The improvement of economic sentiment indicates that the financial market experts have confidence in the resilience of the German economy. However, general economic conditions remain challenging. Apart from the weak global economic dynamics, it is mainly the EU referendum in Great Britain which causes uncertainty," says Professor Achim Wambach, President of ZEW.

Even if the Brexit referendum result is for leave, the UK’s status in the EU would remain uncertain, as there is still a real chance of about 40 per cent that this decision may be revised afterwards. These are the findings of a current study conducted by the Mannheim Centre for European Economic Research (ZEW) among 200 financial analysts.

For the President of the Mannheim Centre for European Economic Research (ZEW), Professor Achim Wambach, the decision reached today by the Federal Constitutional Court in regard to the ECB's OMT programme constitutes a wise middle course. "On the one hand, the Court accepts that at the height of the crisis the ECB was forced to adopt such a resolution in order to stabilise markets. On the other hand, the judges emphasise that, if the OMT programme is indeed implemented, the Federal government will have to remain vigilant. This decision has made the scope of the European Central Bank's competencies even clearer."

Despite the use of numerous instruments of public income redistribution, income and poverty risk in Germany depend greatly on the type of household concerned, and whether or not there are children in a household. A study carried out by the Centre for European Economic Research (ZEW) on behalf of the Family Policy Commission of the Heinrich Böll Foundation shows that, on average, households with children do not manage to gain a total income, through state benefits, paid employment and other sources of revenue, which fully covers the extra needs associated with the presence of children. This is particularly the case for single parents. If weighted according to need, the disposable income per capita of unemployed single-parent households is only 45 per cent of the disposable income of childless couples.

Expectations for the Chinese business cycle have slightly worsened in the current survey period (23/05/ – 07/06/2016). The CEP Indicator, which reflects the expectations of international financial market experts regarding China’s macroeconomic development over the coming twelve months, has dropped by 5.3 points to a current reading of 4.1 points.

In the next two decades, nine per cent of current jobs in the OECD countries (Organisation for Economic Co-operation and Development) will be technically automatable by progressing digitisation – significantly less than has been feared. This is the result of a new study carried out by the Centre for European Economic Research (ZEW), which for the first time analysed the automation risk of jobs in 21 OECD countries based on a task-based approach. Despite far fewer jobs being automatable, the study shows that low-qualified employees are under stronger pressure to adapt. A great demand for advanced training and retraining emerges.

The research award "Zukunft der Arbeitswelt" ("The Future of the Working World") has been conferred by the Volksbank Weinheim Foundation in cooperation with ZEW for the third time. As part of the fourteenth ZEW Conference on the Economics of Information and Communication Technologies (ICT), Dr. Kai Spohrer (32) was presented the award for the best doctoral thesis. In addition, Reinhold Kesler (26) received the award for the best Master's thesis.

On June 1, 2016, the new Research Group "Market Design" started its work at the Mannheim Centre for European Economic Research (ZEW). The group's focus lies on the analysis and optimisation of markets. Its aim is to improve the performance of existing markets by actively shaping market rules. To this end, it examines the peculiarities of each market and identifies their prevailing modes of action.

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This issue contains the M&A Report focusing on "Dynamism in German M&A Market Continues".

Capital Markets Union in Europe: Why Other Unions Must Lead the Way

Philipp Böing; Elisabeth Müller
Measuring Patent Quality and National Technological Capacity in Cross-Country Comparison

Mischa Kleis; Marc-Daniel Moessinger
The Long-Run Effect of Fiscal Consolidation on Economic Growth: Evidence from Quantitative Case Studies

Carlo Gallier; Jörg Langbein; Colin Vance
That's My Turf: An Experimental Analysis of Territorial Use Rights for Fisheries in Indonesia

Dirk Czarnitzki; Julie Delanote
Incorporating Innovation Subsidies in the CDM Framework: Empirical Evidence from Belgium

Torben Schubert; Elisabeth Baier; Christian Rammer
Technological Capabilities, Technological Dynamism and Innovation Offshoring

Christiane Bradler; Susanne Neckermann
The Magic of the Personal Touch: Field Experimental Evidence on Money Appreciation as Gifts

Heike Schweitzer; Thomas Fetzer; Martin Peitz
Digitale Plattformen: Bausteine für einen künftigen Ordnungsrahmen
(Digital Platforms: Components of a Future Regulatory Framework)

Johannes Bersch, Jürgen Egeln and Georg Licht (2016)
Finanzierungsökosystem Baden-Württemberg: Analyse der Angebotsseite
(Financial Ecosystem Baden-Württemberg: Supply-Side Analysis)

Holger Stichnoth (2016)
Verteilungswirkungen ehe- und familienbezogener Leistungen und Maßnahmen
(Distributive Effects of Marriage- and Family-Related Benefits and Measures)

BAK Taxation Index 2014/2015

Firm Dynamics in the Knowledge Economy – Indicator Study 2017

Increasing the R&D Intensity of Firms in Saxony-Anhalt

Relevance of Producer-Oriented Services in Baden-Wuerttemberg, with a Focus on Digitisation

SEEK Project 2016: Digital Marketplaces and Platforms

SEEK Project 2016: European Network on Better Institutions – ZEW ENBI

SEEK Project 2016: Fiscal and Labour Policy Institutions and Inequality

The Quality of Employment and Firm Outcomes: A Panel Analysis of Recent Developments in German Establishments

Speaker: Prof. Dietmar Harhoff, PhD (Director of the Max Planck Institute for Innovation and Competition, Chairman of the Commission of Experts for Research and Innovation of the German government), Julia Holtz (Competition Director, Google), Andreas Mundt (President of the Federal Cartel Office), Christoph Weigler (General Manager, Uber München), Prof. Achim Wambach, PhD (ZEW)
Moderation: Prof. Dr. Thomas Fetzer (University of Mannheim and MaCCI)
Location of the event: ZEW, Mannheim

Speaker: Theresia Bauer MdL (Minister of Science, Research and the Arts of Baden-Württemberg and Head of the ZEW Supervisory Board), Prof. Dr. Clemens Fuest (President of the Ifo Institute and former President of ZEW), Dr. Alexander Selent (Chairman of the ZEW Sponsors Association for Science and Practice), Prof. Dr. Ernst-Ludwig von Thadden (President of the University of Mannheim), Thomas Kohl, Prof. Achim Wambach, PhD (ZEW)
Location of the event: ZEW, Mannheim

Speaker: Zarko Kalamov (TU Berlin)
Location of the event: ZEW, Mannheim

Location of the event: ZEW, Mannheim

Location of the event: ZEW, Mannheim

Speaker: Christian-Philipp Heller (Humboldt University Berlin)
Location of the event: ZEW, Mannheim

Location of the event: ZEW, Mannheim

Speaker: Clemens Recker, M.Sc. (University of Cologne)
Location of the event: ZEW, Mannheim

Picture Credits: News Article of June 15, 2016: ©FKPH, News Article of June 1, 2016: ©iStock.com/MarcelC, Press Release of June 27, 2016: ©panthermedia.net /redstone, Press Release of June 23, 2016: ©iStock.com/KeithBinns, Press Release of June 22, 2016: ©iStock.com/George Clerk, Press Release of June 21, 2016: ©iStock.com/George Clerk, Press Release of June 17, 2016: ©iStock.com/Slonov, Press Release of June 7, 2016: ©iStock.com/muratsenel, Press Release of June 6, 2016: ©2011 Peter Dorn
All further pictures: ©ZEW