Newsletter October 2019

For seven years now, Chinese executives have been attending ZEW’s month-long training programme ‘Fit for Partnership in Germany’. The programme, which is funded by the Federal Ministry of Economics and Energy (BMWi), is overseen by Barbara Hey, deputy head of the ZEW Department “Knowledge Transfer and Qualification Programmes”, together with her colleague Manuel Lauer.

On 18 and 19 December 2019, ZEW Mannheim will be on site at the European Job Market (EJM) of the European Economic Association (EEA) in Rotterdam. For the second time, doctoral students and researchers in general will have the opportunity to explore the academic labour market in the field of economics and get in touch with universities and research institutions from all over Europe. The ZEW HR team will conduct on-site job interviews on both days and is looking forward to meeting interesting candidates. Visitors can register for the event until 15 November 2019. The deadline for applications for ZEW vacancies is 17 November 2019.

On October 24, Mario Draghi chaired his last meeting of the European Central Bank’s (ECB) Governing Council. After eight years as president, Draghi will depart from the ECB at the end of the month, having shaped it like no one before him. ZEW President Achim Wambach looks back on Draghi’s tenure as head of one of the world’s most important central banks.

Digital change is a highly dynamic process that affects Europe’s labour markets. Polarisation and inequality are two of the greatest challenges to be tackled: while activities involving interactive and analytical skills will be able to withstand change, routine tasks are more likely to be automated in the future. So far, automation processes in companies have created more jobs than they have destroyed. However, it is important to make and keep people fit for the job market of the future through targeted training and further education.

These were the key messages of the most recent ZEW Lunch Debate on 23 October 2019 at the Representation of the State of Baden-Württemberg to the European Union in Brussels.

Joining recent expert forums in Brussels, Canberra, Chicago and London, the German government in September set up the Berlin commission “Competition Law 4.0” to develop proposals for creating a regulatory framework that meets the challenges posed by the digital economy. Government agencies all around the world, including those in the United States, have ramped up efforts to reign in the leading online digital platforms and pass new competition law for the digital age. In Germany, legislators are currently working on the tenth amendment to the country’s Act Against Restraints of Competition (GWB), which like the previous set of revisions devotes much of its attention to the digital economy.

From all these efforts, guidelines for an economic order for the digital economy can be derived.

The European Court of Justice (ECJ) strives to safeguard the rule of law within the European Union, all while harmonising its own jurisdiction with that of the EU Member States – a complex task that is not without obstacles, as Professor Juliane Kokott, Advocate General at the ECJ, described during the lecture series First-Hand Information on Economic policy, which took place at ZEW Mannheim on Thursday, 17 October 2019.
 

On 12 October 2019 Professor Otto H. Jacobs celebrated his 80th birthday. The board of directors and the staff of ZEW Mannheim would like to offer their congratulations on this special occasion.

The European Union is facing major upheavals: the political agenda is defined by topics like climate protection, digitalisation and migration. At the same time, EU-sceptic parties are on the rise, and the UK’s imminent exit from the European Union threatens to massively impact the economy. In this context, where is Europe headed in the future, and which topics should the new European Commission prioritise along the way? These were the key questions discussed from a variety of angles at the first European Evening of the First-Hand Information on Economic Policy event series, which took place at ZEW Mannheim on Wednesday, 9 October 2019.

ZEW Mannheim, the University of International Business and Economics (UIBE) in Beijing and the Alexander von Humboldt Foundation jointly organised this year’s Beijing Humboldt Forum in the Chinese capital on 21–23 September 2019. As part of the event, ZEW hosted a session entitled “Climate Change Mitigation, Air Pollution Control and the Mobility Sector”. During the session, ZEW researchers engaged in a discussion with international guests regarding the role of environmental, energy, and innovation policies in the development of an emissions-reduced transport sector in the EU and China.

The policy package recently adopted by the federal government’s Climate Cabinet has been criticised by many and has – not least for that reason – been subject of a number of in-depth analyses by economists. This was clearly reflected at this year’s conference of the Verein für Socialpolitk (VfS, German Economic Association) held at the University of Leipzig from 23 to 25 September. ZEW’s contribution to the conference included a total of 16 presentations by ZEW researchers, a panel discussion moderated by ZEW President Professor Achim Wambach, and a ZEW information stand.

Dr. Sarah Necker was a visiting researcher in ZEW’s Research Department “Corporate Taxation and Public Finance” from 21 to 25 October 2019. She is Executive Research Associate at the Walter Eucken Institut in Freiburg. Her research interests lie in the field of applied economics and focus on the incentives for unethical or illegal behaviour. Currently, Sarah Necker is researching on how cheating has developed over time, while also studying the demand and supply of collaborative tax evasion/undeclared work. During her stay, she worked on a study, using a laboratory experiment to examine how reductions of the tax liability up to certain thresholds, so-called notches, affect tax compliance. The experiment aims to disentangle the labour supply and evasion response in a notched tax system compared to a tax system without notches. She also examines how taxpayers with different incomes behave in the two systems.

Jarkko Harju, PhD, was a visiting researcher in ZEW’s Department “Social Policy and Redistribution” from 15 to 17 October 2019. He is a research professor at the VATT Institute for Economic Research in Helsinki, Finland. His research focuses on public and labour economics. In his current work he studies firm responses to changes in value added and payroll taxes. During his visit, he worked with ZEW researcher Professor Sebastian Siegloch on topics relating to tax incentives and firm investments in research and development. Moreover, Jarkko Harju talked about using payroll tax variation to unpack the black box of firm-level production in a Mannheim Applied Seminar on 16 October 2019.
 

Sebastian Lazar, PhD, was a visiting researcher in ZEW’s Department “Corporate Taxation and Public Finance” from 2 September to 15 October 2019. He is an associate professor at the Alexandru Ioan Cuza University of Iasi, Romania. He teaches and works in the fields of taxation, financial management, public budgeting and higher education. Sebastian Lazar is currently working on a study on effective tax rates and loan loss at banks.

Anna Tzanaki, PhD, was a visiting researcher in the ZEW Junior Research Group “Competition and Innovation” in ZEW’s Department “Corporate Taxation and Public Finance” from 7 to 11 October 2019. She is a senior lecturer and a Marie Curie Fellow at Lund University’s Faculty of Law in Sweden. Furthermore, she was a Max Weber Fellow at the European University Institute based in Florence, Italy, during the academic year 2018–2019. Her research focuses on antitrust and competition law, law and economics, corporate governance, industrial organisation, economic regulation and governance, public policy, EU law as well as comparative law. During her visit, she worked with ZEW researcher Dr. Niklas Dürr on topics relating to partial ownership and minority share acquisitions. Moreover, Anna Tzanaki talked about the partial ownership of competitors in Europe in a ZEW Research Seminar on 8 October 2019.
 

Professor emeritus Egon Lorenz, former Supervisory Board member of ZEW Mannheim and legal scholar at the University of Mannheim, passed away on 16 October 2019 at the age of 85. The legal expert contributed his scientific expertise to the ZEW committee for 16 years.

If a child from a family that has fled to Germany attends a daycare centre, the mother in particular has a much easier time integrating into society insofar as she becomes more fluent in German, among other things, which facilitates an easier job search and alleviates homesickness. Overall, mothers with children in daycare – measured by an overall index for integration – are 42 per cent better integrated than refugee mothers in Germany who do not have a child in daycare. This is the result of a study conducted jointly by researchers from ZEW Mannheim and the German Institute for Economic Research (DIW Berlin).

At its last meeting under the chairmanship of ECB President Mario Draghi, the ECB Governing Council decided to make no further changes to its monetary policy. This leaves the deposit rate at its current level of minus 0.5 per cent. Furthermore, from November 2019, the central banks of the Eurosystem will again start their net purchase of assets with a monthly volume of 20 billion euros. Professor Friedrich Heinemann, head of the Research Department “Corporate Taxation and Public Finance” at ZEW Mannheim, comments on the ECB’s decision.

In the most recent survey for October (8–17 October 2019), the expectations regarding the Chinese economy have increased by 11.9 points. The CEP Indicator, which reflects the expectations of international financial market experts regarding China’s macroeconomic development over the coming twelve months, is currently at minus 5.8 points (September 2019: minus 17.7 points). Last month’s decline of 12.8 points was thus largely offset by the rise recorded in October.

In view of the many new challenges, the EU should restructure its budget in the Multiannual Financial Framework (MFF) after 2020. A fundamental reorientation of the European budget towards policy fields with a verifiable European added value is overdue. The current expenditure structure favours above all policy areas such as the Common Agricultural Policy (CAP) and cohesion policy, the European benefits of which are questionable. Instead, the EU budget should rather focus on financing policies that demonstrably create European added value.

Professor Friedrich Heinemann, head of the Research Department “Corporate Taxation and Public Finance” at ZEW Mannheim made this position clear today at an expert hearing on the next MFF in the Bundestag’s EU Committee in Berlin.

German economic policy currently has to react to two developments that have a major impact on markets worldwide: on the one hand, the emergence of powerful internet giants through digitalisation, and on the other hand, China’s economic success, which relies on the influence of large state-owned corporations. Germany can respond to these developments by combining the principle of the social market economy with an updated competition law. This was the recommendation made today by Professor Achim Wambach, president of ZEW Mannheim, at the Federal Ministry for Economic Affairs and Energy (BMWi), where he was awarded a 3,000 euro prize in the series “Impulsreden zur Sozialen Marktwirtschaft” (“Keynote Speeches on the Social Market Economy”) by the Wirtschaftspolitische Club Deutschland e.V. (Economic Policy Club Germany).

The German Bundestag passed the Federal Ministry of Finance’s proposal for a property tax reform by approving an amendment to the Basic Law. The property tax reform must be completed by the end of the year as the Federal Constitutional Court had previously objected to outdated tax bases. Professor Sebastian Siegloch, head of the Research Department “Social Policy and Redistribution” at ZEW Mannheim, comments on the adoption of the reform by the German parliament.

If banks are in distress and therefore depend on rescue measures by bankers’ associations, the customers of these banks may be negatively affected by this. Specifically, there is a growing danger that the corporate customers of the rescued financial institutions will no longer have sufficient trade credits at their disposal and may therefore get into financial difficulties themselves. These are the results of a study conducted jointly by researchers from ZEW Mannheim, the Deutsche Bundesbank and KU Leuven.

The ZEW Indicator of Economic Sentiment for Germany recorded a very slight decrease of 0.3 points in October 2019, and now stands at minus 22.8 points. It thus remains well below the long-term average of 21.4 points. In the current October survey, the assessment of the economic situation in Germany worsened again, by 5.4 points, with the corresponding indicator falling to a current reading of minus 25.3 points. This has been the lowest reading since April 2010.

Greenpay, the project of the secondary school Werner-Heisenberg-Gymnasium team from Weinheim, Germany, received a unanimous decision at the finals of the “YES!–Young Economic Summit” competition for students in Hamburg on 26 and 27 September 2019, winning this year’s competition. The student group was supervised by economist Carina Fugger from the Research Department “Environmental and Resource Economics, Environmental Management” at ZEW Mannheim. As in the previous years 2017 and 2018, a team mentored by ZEW outshone all other 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

Katrin Hussinger and Abdul-Basit Issah
Firm Acquisitions by Family Firms: A Mixed Gamble Approach

Christoph Grimpe, Wolfgang Sofka, Philipp Schulz and Geoffrey Thilo Borchhardt
Markets for Technology in Europe – Mapping Demand and Its Drivers

Verena Dutt, Katharina Nicolay, Heiko Vay and Johannes Voget
Can European Banks’ Country-by-Country Reports Reveal Profit Shifting? An Analysis of the Information Content of EU Banks’ Disclosures

Johannes Bersch, Hans Degryse, Thomas Kick and Ingrid Stein
The Real Effects of Bank Distress: Evidence from Bank Bailouts in Germany

Vitali Gretschko and Martin Pollrich
Incomplete Contracts in Dynamic Procurement

Carlo Gallier, Timo Goeschl, Martin Kesternich, Johannes Lohse, Christiane Reif and Daniel Römer
Inter-Charity Competition Under Spatial Differentiation: Sorting, Crowding, and Spillovers

Jonathan Eberle and Philipp Böing
Effects of R&D Subsidies on Regional Economic Dynamics: Evidence from Chinese Provinces

Carolina Spaini, Christian Rammer, Kincsö Izsak, Inga Sabanova, Jean-François Romainville, Paresa Markianidou, Antonio Collado, Henning Kroll, Sven Wydra and Els van de Velde
Towards Better Monitoring of Innovation Strengths, Regional Specialisation and Industrial Modernisation in the EU

Annika Havlik, Daniela Steinbrenner, Nikolas Wölfing, Julia Braun, Christoph Harendt, Bernhard Koldert, Tobias Müller, Michael Thöne, Julia Gruber, Kathrin Gunkelmann, Carsten Hänisch, Jonas Klos, Regina Kühne, Raoul Peter, Luca Rebeggiani, Mirko Seithe and Sven Stöwhase
Evaluierung von Steuervergünstigungen II – Teilbericht A, Evaluierungsgruppe A: Energie- und Stromsteuer (Evaluation of Tax Benefits II – Sub-Report A, Evaluation Group A: Energy and Electricity Tax)

Wolfgang Briglauer and Peter Schmitz
Gutachten zur ökonomischen und rechtlichen Sinnhaftigkeit von nachfrageseitigen Förderungen im Ausbau moderner Breitbandnetze über „Voucher-Systeme“ (Expert Opinion on the Economic and Legal Sense of Demand-Side Subsidies in the Expansion of Modern Broadband Networks via Voucher Systems)

Additionality of Public Support to EFRE Co-Financed R&D Projects in Saxony 2014–2018

digilog@bw – Digitalisation in Dialogue

Distributional Effects of Family Policy Measures: Empirical Evidence Based on the Socio-Economic Panel (SOEP)

Economics of Climate Change – Topic Coordination: Climate Protection: Instruments and Policies After COP21

Evaluation of BMBF's Research Programme “ICT 2020 – Research for Innovation”

Networks of Innovative Firms (NETINU)

Speaker: Noam Yuchtman (London School of Economics and Political Science (LSE), United Kingdom)
Location of the event: ZEW, Mannheim

Speaker: Florian Baumann (University of Bonn)
Location of the event: ZEW, Mannheim

Speaker: David Schönholzer (Stockholm University, Sweden)
Location of the event: ZEW, Mannheim

Speaker: Friedhelm Dommermuth (Bundesnetzagentur, Bonn)
Location of the event: University of Mannheim

Speaker: Axel Börsch-Supan (Max Planck Institute for Social Law and Social Policy, Munich Center for the Economics of Aging (MEA))
Location of the event: ZEW, Mannheim

Location of the event: ZEW, Mannheim

Location of the event: ZEW, Mannheim

Location of the event: ZEW, Mannheim

Location of the event: ZEW, Mannheim

Speaker: Lingwei Wu (University of Bonn)
Location of the event: ZEW, Mannheim

Speaker: Philippe Sulger (Swiss Competition Commission in Bern, Switzerland)
Location of the event: ZEW, Mannheim

Speaker: Sven Simon (Max Planck Society for the Advancement of Science e.V., Munich)
Location of the event: ZEW, Mannheim

Speaker: Christian Peukert (Universidade Catolica Portuguesa, Lisbon, Portugal, and ETH Zurich, Switzerland)
Location of the event: ZEW, Mannheim

Speaker: Stefan Wilbert (Stadtwerke Köln GmbH)
Location of the event: University of Mannheim

Speaker: Prof. Dr. Christoph M. Schmidt (Chairman of the German Council of Economic Experts)
Location of the event: ZEW, Mannheim

Picture Credits: press release of 30 October 2019: iStock.com/BraunS, press release of 24 October 2019: Anna Logue Fotografie, news article of 24 October 2019: iStock.com/instamatics, news article of 23 October 2019: FKPH, news article of 22 October 2019: Anna Logue Fotografie, press release of 21 October 2019: Anna Logue Fotografie, press release of 21 October 2019: info@prophot-keinod.de, press release of 18 October 2019: Anna Logue Fotografie, news article of 17 October 2019: Erich Dichiser EDM, press release of 15 October 2019: iStock.com/jpique,news article of 11 October 2019: Erich Dichiser EDM, news article of 09 October 2019: UIBE, press release of 30 September 2019: YES! – Young Economic Summit, news article of 26 September 2019: Christoph Kutta
 
All further pictures: © ZEW