Newsletter May 2020

ZEW’s Research Department “Labour Markets and Human Resources” recently created a new Junior Research Group, “The Integration of Migrants and Attitudes Towards the Welfare State (IMES)”. Its stated goal is to better understand the effects of immigration on the host country and the integration of migrants into the labour market. The group’s head, Dr. Katrin Sommerfeld, tells us about the fruits of the research so far and what it plans in the future.

This year’s ZEW Public Finance Conference discussed the progress made in local public economics, leading the way in the digital sphere – the public finance conference that took place online on 8 May 2020 was one of the first large economic conferences held during the coronavirus pandemic. Around 120 international researchers from different time zones came together in this virtual space to discuss the topic “Advances in Local Public Economics” as well as issues at the interface of public finance and political economy.

The coronavirus crisis has not only severely affected many European countries, but is also putting European cohesion to the test. While the Member States and institutions such as the European Parliament and the European Commission are largely united on the need for a European response to the crisis, there is still disagreement on how the aid measures should be implemented. Who will provide the financial means? Should their allocation be linked to reform conditions? And what will happen after the crisis?

This year, the Meritum Promotion Prize of the Deutsches Aktieninstitut e.V. has been awarded to the YES! – Young Economic Summit project. ZEW Mannheim, academic partner for YES! and mentor of the winning teams of the past three years, congratulates Germany’s largest school competition regarding global economic issues on receiving the prize, which is endowed with 25,000 euros.

Matthias Ruchser is head of the newly formed “Communications” Service Department at ZEW Mannheim, which includes the teams of “Press Relations and Editing”, “International Co-operation and Public Relations”, and “Media Design”. “As a research institute that not only provides excellent, evidence-based research results and economic policy advice but also boasts an innovative and highly motivated communications team, ZEW is extremely well positioned,” comments Matthias Ruchser on his new task. “It is now a matter of building on the success achieved so far and providing new impulses for knowledge marketing and cross-media science communication. I am very much looking forward to this,” Ruchser continues.

Matthias Ruchser has long-standing work experience both in the energy sector and in academia. In addition, he has published widely in his fields of expertise: German energy transition, climate action, sustainable development, and the Sustainable Development Goals (SDGs).

In the current May survey (11–20 May 2020), the CEP indicator falls by 21.7 points to a value of 14.8 points, largely reversing last month’s 25.4-point increase. The CEP indicator, based on the China Economic Panel (CEP) in cooperation with Fudan University, Shanghai, reflects the economic expectations of international financial market experts for China on a 12-month basis.

The 500-billion-euro Recovery Fund proposed by Angela Merkel and Emmanuel Macron would provide Italy with a net financial aid of 26 billion euros at most. Germany’s net burden could fall between 23 billion and 38 billion euros, while Poland would become the largest net payer relative to its own economic output, with a contribution of 10.4 billion euros. These are the results of a simulation by ZEW Mannheim.

Innovative young companies that create novel and previously unknown products and services face difficulties in finding resources to enter the market. The traditional financing method through bank loans is usually not an option for these companies, whose undertakings are deemed to be too risky by banks and who often lack the necessary collateral. As a consequence, these firms rely on private or institutional investors, who buy company stakes and are later compensated for the company’s success in the form of profit-sharing or, more frequently, with proceeds from selling corporate shares. In case of bankruptcy, however, investors face the risk of losing their entire investment.

In May 2020, the ZEW Indicator of Economic Sentiment for Germany recorded an increase for the second time in a row, and now stands at 51.0 points, 22.8 points higher than in the previous month. In the current survey, the assessment of the economic situation in Germany, by contrast, continued to decrease slightly, with the corresponding indicator dropping 2.0 points to a new value of minus 93.5 points.

Against the backdrop of the severe coronavirus-induced recession, the German Federal Ministry of Finance’s Working Party on Tax Revenue Estimates has now published its new forecasts. According to the estimates, this year alone, tax revenues at federal, state and municipal level will be 98.6 billion euros lower than previously expected. For the years 2020 to 2023, the expected revenues have been revised downwards by a total of 315.9 billion euros. Professor Friedrich Heinemann, head of the Research Department “Corporate Taxation and Public Finance” at ZEW Mannheim, comments on this matter.

Today the Federal Constitutional Court announced its eagerly awaited ruling on the “Public Sector Purchase Programme” (PSPP) of the European Central Bank (ECB). The Karlsruhe court considers that, with the ECB’s decision to establish a PSPP, the central bank exceeded its monetary policy mandate insofar as the ECB has unsatisfactorily proven the programme’s proportionality. If the Governing Council does not provide a justification of the proportionality of the measure within three months, the Bundesbank is prohibited from further participation in the PSPP.

Professor Friedrich Heinemann, head of the Research Department “Corporate Taxation and Public Finance” at ZEW Mannheim, comments on this matter.

Companies in the German information economy are frequently dissatisfied with the EU General Data Protection Regulation (GDPR), which came into force in May 2018. In half of the companies, the negative aspects of the new regulations on personal data protection predominate after the two-year period, while the positive aspects of the GDPR outweigh the negative ones for just under five per cent of companies. The introduction of the GDPR quite frequently complicated companies’ regular business processes, leading to a high workload regarding the implementation of new requirements.

This is the result of a recent representative survey of about 600 companies in the information economy, conducted by ZEW Mannheim in March 2020.

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

Friedrich Heinemann
Simulating the Distributive Effect of the Macron-Merkel-Recovery Fund

Alina Kristin Bartscher, Sebastian Seitz, Michaela Slotwinski, Nils Wehrhöfer and Sebastian Siegloch
Social Capital and the Spread of Covid-19: Insights From European Countries

Christopher Busch and Alexander Ludwig
High-Order Income Risk over the Business Cycle

Christian Rammer, Felix Roth, and Markus Trunschke
Measuring Organisation Capital at the Firm Level: A Production Function Approach

Maria Arvaniti and Wolfgang Habla
The Political Economy of Negotiating International Carbon Markets

Christoph Spengel, Frank Schmidt, Jost Heinrich Heckemeyer, Katharina Nicolay, Alexandra Bartholmeß, Christopher Ludwig, Daniela Steinbrenner, Peter Buchmann, Theresa Bührle, Verena Dutt, Leonie Fischer, and Barbara Stage
Effective Tax Levels Using the Devereux/Griffith Methodology – Update 2019

Christoph Spengel, Christopher Ludwig, Raphael Müller, and Ann-Catherin Werner
Sharing Economy – Steuerliche Herausforderungen und Lösungsansätze
(Sharing Economy – Tax Challenges and Possible Solutions)

Marius Berger, Jürgen Egeln, and Sandra Gottschalk
Finanzierung von Unternehmensgründungen durch Privatinvestoren (Financing of Company Start-ups by Private Investors)
Auswertungen und Analysen auf Basis des IAB/ZEW-Gründungspanels 2019 (Evaluations and Analyses Based on the IAB/ZEW Start-up Panel 2019)

BAK Taxation Index 2020/2021

Employer Preferences and Restrictions in the Context of Digital Transformation: Evidence from Randomized Survey Experiments

Innovation Survey 2020 for Brandenburg

In order to support the nationwide containment measures against the coronavirus, ZEW is examining to what extent the events listed here can take place virtually. Individual dates may be postponed. The current status of the events can be found in the ZEW Events Calendar. If you have any questions, please don’t hesitate to contact our event team at event@zew.de.

Speaker: Peter Cramton (University of Cologne)
Location of the event: Online via ZOOM

Speaker: Joel Slemrod (University of Michigan, USA)
Location of the event: Online via ZOOM

Speaker: Özlem Bedre-Defolie (European School of Management and Technology (ESMT), Berlin)
Location of the event: Online via ZOOM

Redner: Cristian Badarinza (National University of Singapore)
Veranstaltungsort: Online via ZOOM

Speaker: Giovanni Peri (University of California (UC Davis), USA)
Location of the event: Online via ZOOM

Redner: Shane M. Greenstein (Harvard Business School, USA)
Veranstaltungsort: Online via ZOOM

Speaker: Efi Adamopoulou (University of Mannheim)
Location of the event: Online via ZOOM

Speaker: Rossella Argenziano (University of Essex, United Kingdom) and Alessandro Bonatti (Sloan School of Management (MIT), Cambridge, USA)
Location of the event: Online via ZOOM

Speaker: Avi Goldfarb (University of Toronto, Canada)
Location of the event: Online via ZOOM

Location of the event: Online via ZOOM

Tenure Track Researcher (f/m/d, PhD, 100 %) for the Research Department “Environmental and Resource Economics, Environmental Management”

Picture Credits: press release of 25.05.2020: iStock.com/erdikocak, personalia article of 25.05.2020: Barbara Fromman, news article of 19.05.2020: ZBW, press release of 19.05.2020: iStock.com/BraunS, press release of 14.05.2020: Anna Logue Fotografie / ZEW, press release of 05.05.2020: iStock/instamatics, news article of 29.04.2020: PantherMedia/pressmaster, news article of 29.04.2020: Anna Logue Fotografie / ZEW
 
All further pictures: ©ZEW