Newsletter December 2016

Dear Readers,
 
An eventful year 2016 is drawing to a close. With the relaunch of the ZEW website in January (you are kindly invited to give us your opinion on the new website in our reader survey) and the redesign of the newsletter in May, we started off the year 2016 with two highlights. The excellent evaluation by the Leibniz Association and the 25th anniversary celebration of ZEW further contributed to what has been a very successful year for us.
 
Today, we are sending you the last issue of the ZEW Newsletter in 2016. We would like to thank you for your sustained interest in receiving news from ZEW. We wish you and your loved ones a pleasant festive season and a prosperous, healthy New Year!
 
Best wishes,
the ZEW Newsletter editorial team

At the beginning of the year, from 6–8 January 2017, ZEW will participate in the ASSA Annual Meeting in Chicago. With over 13,000 participants, the event, organised by the American Economic Association (AEA) with the Allied Social Sciences Associations (ASSA), is the world's most important conference in economics. As in the previous year, ZEW researchers will take the annual meeting as an opportunity to present recent research findings in scientific sessions – no less than eleven contributions from ZEW researchers were accepted in the highly competitive selection process – and to network with economists from all over the globe.

Economic truths can be cruel. In 1993, the University of Minnesota’s Joel Waldfogel published a famous article about the deadweight loss that occurs at Christmas. According to his analysis, billions are lost each year during the holidays. To understand his argument better, we must take a look at last year’s Christmas presents.

In the fourth quarter of 2016, the German Real Estate Finance Index (DIFI) has dropped by 2.3 points to a current reading of 4.4 points. The index has thereby recorded its lowest value in four years. This marks the continuation of a downward trend which has been going on since the beginning of 2015. The reason for this development can be found in the pessimistic expectations concerning the financing conditions in the coming six months. On average, the difference between the positive and negative assessments for all types of real estates has declined by 5.7 points to a level of -7.7 points. These are the key findings of the DIFI Report, a quarterly survey on the real estate financing market in Germany carried out by ZEW in cooperation with JLL.

The currently very low interest rates are having a decisive influence on the savings behaviour in Germany. These are the findings of a survey conducted by the Centre for European Economic Research (ZEW) among approximately 3,600 bank customers between October and November 2016, on behalf of ING-DiBa. 40 per cent of the respondents stated to save less or no money due to the low interest rate level. Saving levels are particularly low among households with a comparatively low net income and low financial wealth. At the same time, this customer group shows a decreasing interest in saving. By contrast, the survey shows that particularly in the case of younger and risk-tolerant savers, there is a growing interest in finding investment alternatives to traditional investments such as call money or fixed deposits. Securities and real estate are gaining in attractiveness as a result of low interest rates.

On 8 December 2016 the Mannheim Centre for European Economic Research (ZEW) celebrated its 25th anniversary with a ceremony attended by around 300 guests. Partners and patrons from the worlds of politics, science and industry used their welcoming speeches to pay a resounding tribute to the institute's achievements as an outstanding research institution which has spent the last 25 years conducting research at the highest level.
The ZEW image film, which was first shown at the anniversary ceremony (in German)

On 16 and 17 November 2016 the Centre for European Economic Research (ZEW) hosted a workshop for users of the ZEW Research Data Centre (FDZ) in Mannheim. About 40 national and international researchers attended the event to present and discuss their studies based on ZEW survey data.

On 25 January 2016 the ZEW website went live with a new, modern design and a more user-friendly concept. Particular attention was paid to presenting users with an overview of the extensive range of activities at the institute. As a user of the site, your opinion is important to us. What do you like about the new design? What could be improved? Please take the time to fill out our survey on the ZEW website and help us continue to improve our web presence for you. The anonymous survey takes no more than 5-10 minutes and all information is provided voluntarily.

The Centre for European Economic Research (ZEW) and the Mannheim Centre for Competition and Innovation (MaCCI) are pleased to announce their seventh conference on the Economics of Innovation and Patenting in Mannheim on 15 and 16 May 2017. The goal of the conference is to present new research and to stimulate discussion between international researchers conducting related empirical and theoretical analysis. As a novelty, we will organise a special paper speed dating session, which consists of a short plenary presentation of key ideas and results followed by individual discussions based on posters. Theoretical, empirical, and policy-oriented contributions from all areas of the economics of innovation and patenting are welcome. Interested researchers are invited to submit a paper or an extended abstract in PDF format to innopat2017@zew.de no later than 15 February 2017.

The Centre for European Economic Research (ZEW) is pleased to announce the Annual ZEW Public Finance Conference with a focus on public finance and development in Mannheim on 8 and 9 May 2017. Submissions on the conference focus are particularly welcome; besides, we encourage submissions from all other areas of public economics and political economy. Please submit your paper via our conference management website no later than 15 February 2017. No conference fee will be charged for presenters.

On 28 November 2016, the members of the regulatory policy commission of an association for family-run businesses, Die Familienunternehmer e.V., visited ZEW. Researchers from ZEW's Research Units "Corporate Taxation and Public Finance", "International Distribution and Redistribution" and "Market Design" shared and discussed recent research findings with the guests. Dr. Sandra Gottschalk, senior researcher in the Department "Economics of Innovation and Industrial Dynamics", presented empirical research based on data from the Mannheim Innovation Panel. The visit was concluded with a presentation by ZEW President Prof. Achim Wambach, PhD, on the latest Report of the German Monopolies Commission.

The US Federal Reserve raised its key interest rate by 0.25 per cent, to a range of 0.5 to 0.75 per cent. Professor Friedrich Heinemann, head of the "Corporate Taxation and Public Finance" Research Department at the Centre for European Economic Research (ZEW) in Mannheim, comments on the decision.

The ZEW-CS-Indicator for the economic sentiment in Switzerland has continued its rise in December 2016. Growing by 4.0 points, the index now stands at 12.9 points. The indicator's current level is therefore far above the long-term average of about minus 10 points. This marks the continuation of an upward trend observed since October 2016. When it comes to the current economic situation in Switzerland, however, experts are less positive in their evaluation than in the previous month: The corresponding indicator declined by 5.0 points to a level of 9.7. None of the survey participants evaluated the current economic situation in Switzerland as "bad."

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 monthly 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 remained unchanged at a level of 13.8 points (long-term average: 24.0 points) in December 2016. "The ZEW Indicator of Economic Sentiment remains at the same level; however, given the fact that the evaluation of the current situation has once again recorded an improvement, the overall assessment is quite positive. This is supported by the recently published positive GDP growth figures for the euro area in the third quarter.

The considerable economic risks arising from the tense situation in the Italian banking sector, as well as the political risks surrounding upcoming elections in Europe, seem to have faded into the background at the moment," comments ZEW President Professor Achim Wambach, PhD.

While rising housing prices in large cities are currently a popular topic for discussion in Germany, there are an increasing number of homes in rural and peripheral areas being left vacant. This is particularly, though not exclusively, the case in the East German states. A decisive factor for high numbers of empty properties is often a struggling local economy. Vacant housing in turn exerts pressure on property prices in the surrounding area. These are the findings of a current discussion paper of the Centre for European Economic Research (ZEW) in Mannheim. The study is part of the interdisciplinary research project "Single-Family Homes under Pressure (Homes-uP)", which is funded by the Leibniz Association.

The Centre for European Economic Research (ZEW), a member institution of the Leibniz Association, is celebrating its 25th birthday today! "ZEW has been conducting research at the highest level for 25 years. Alongside this, it also aims to advise, assist and shape economic policy. This combination of excellence and the institute's public orientation is something very special," said Baden-Württemberg Minister for Science Theresia Bauer at the anniversary celebration in Mannheim. Around 300 guests, including friends, patrons and partners of the institute both past and present took up the invitation issued by ZEW's Board of Directors to celebrate a quarter of a century of excellent research and policy advice at ZEW.

The latest survey carried out in November (14–30 November 2016) indicates that expectations for the Chinese economy continue to improve. The CEP Indicator, which reflects the expectations of international financial market experts regarding China’s macroeconomic development over the coming twelve months, has increased by 5.1 points to a current total of 5.0 points. The indicator therefore currently lies only slightly below the long-term average of 5.4 points. The current economic situation in China is, however, assessed more negatively compared to the previous month, with the corresponding sub-indicator falling by 8.3 points to a current level of minus 5.2 points.

The Mannheim Centre for European Economic Research (ZEW) has achieved a rating of very good to excellent as part of a regular external evaluation to which all institutions within the Leibniz Association must submit themselves at least once every seven years. On the basis of this result, the Senate of the Leibniz Association has made the decision to recommend further federal and state funding for the institution. In the words of the Senate, "ZEW's work deals with the conditions of many high-functioning markets and institutions in Europe.

Using a wide variety of methods, the institute conducts research into current and relevant issues. In doing so, it draws upon, among other things, an impressive bank of empirical data compiled by ZEW itself, which the institute makes accessible through an accredited research data centre. Based on its research results, ZEW is also able to provide comprehensive, high-quality economic policy advising."

Crowdworking – i.e. the allocation of usually internal business tasks and projects via online platforms to external workers, who are paid to perform those tasks – has become a well-known concept among German businesses in the manufacturing industry and information economy. The share of businesses actually using crowdworking platforms, however, is very small – well below 5 per cent. Compared to the results of the first survey conducted on that issue in 2014, this figure has remained almost unchanged.

This is the result of a representative survey among businesses carried out by the Centre for European Economic Research (ZEW), on behalf of the Federal Ministry of Labour and Social Affairs (BMAS) in September 2016.

Technological change brings about permanent changes in the working world. The Mannheim Centre for European Economic Research (ZEW) conducted comprehensive research on the challenges of digitalisation for labour markets in Germany, Europe and in 21 countries of the OECD (Organisation for Economic Co-operation and Development). A recent policy brief summarises key findings from related ZEW studies.

Digitalisation creates more jobs than it destroys, but it has a major restructuring impact on our labour markets. It strongly changes work contents, raises requirements for qualifications and competencies, and, hence, puts greater pressure on employees to adapt to these structural changes.

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

This issue contains the M&A Report focusing on "Mergers and Acquisitions in Germany: M&A Index Hits Record Highs".

Sarra Ben Yahmed
Formal But Less Equal. Gender Wage Gaps in Formal and Informal Jobs in Brazil

Bernd Fitzenberger; Marina Furdas; Christoph Sajons
End-of-Year Spending and the Long-Run Employment Effects of Training Programs for the Unemployed

Dirk Crass; Christian Rammer; Birgit Aschhoff
Geographical Clustering and the Effectiveness of Public Innovation Programs

Oliver Lerbs; Markus Teske
The House Price-Vacancy Curve

Marianne Saam; Laura Weinhardt; Lukas Trottner
Public ICT Investment in Reaction to the Economic Crisis – A Case Study on Measuring IT-related Intangibles in the Public Sector

Christian Rammer; Jan Kinne; Knut Blind
Microgeography of Innovation in the City: Location Patterns of Innovative Firms in Berlin

Udo Brixy; Martin Murmann
The Growth and Human Capital Structure of New Firms over the Business Cycle

Michael Astor, Christian Rammer, Cordula Klaus and Georg Klose
Innovativer Mittelstand 2025 – Herausforderungen, Trends und Handlungsempfehlungen für Wirtschaft und Politik (Innovative SMEs in 2025 - Challenges, Trends and Recommended Actions for the Business Sector and Economic Policy)

Marianne Saam; Thomas Niebel
Vergleich der Ausgaben für Digitalisierungsprojekte im Mittelstand mit den gesamtwirtschaftlichen IKT-Investitionen (Comparing the Expenditure of SMEs on Digitization Projects with Overall ICT Investment)

Job Search Strategies – Selection and Employment Effects

Regional Innovation Systems in Baden-Wuerttemberg – State of Play and Conclusions

Location of the event: ZEW, Mannheim

Speaker: Prof. Dr. Dr. h.c. mult. Hans-Werner Sinn (Former President of Ifo Institute (1999-2016))
Location of the event: ZEW, Mannheim

Speaker: Barbara Hey (ZEW), Manuel Lauer (ZEW)
Location of the event: ZEW, Mannheim

Picture Credits: Press Release of 14 December 2016: ©iStock.com/George Clerk, Press Release of 11 November 2016: ©shutterstock.com/Gualtiero Boffi
 
All further pictures: ©ZEW