Newsletter June 2020

The ongoing coronavirus crisis is now also reflected in the German Real Estate Finance Index (DIFI) of ZEW and JLL. In the second quarter of 2020, the sentiment indicator fell by 37.8 points to a current level of minus 56.7 points, with both the assessment of the current financing situation and the financing expectations for the coming six months having declined significantly. The variety of economic consequences and the uncertain impact of national and European economic stimulus packages have pushed the index to its lowest level since the survey began in 2011.

The coronavirus has hit the world economy hard, with the lockdown having paralysed public life for weeks in many countries. But even with the lockdown easing up, hygiene and distance regulations still make it difficult to work together, shop, and use business services. Professor Irene Bertschek, head of the ZEW Research Department “Digital Economy”, explains in an interview what role the digitalisation of companies plays in their resilience to the crisis, and how different industries can react to the markedly changed conditions.

While the citizens of Baden-Württemberg continue to deal with the coronavirus pandemic, the state as a business hub must grapple with the economic challenges posed by it. Many employees are still working in short-time work schemes, and solo self-employed workers fear that they go out of business. Supply chains have been disrupted, while the automotive industry and its suppliers are suffering from a collapse in both domestic and export demand. For ZEW Mannheim’s online event focussing on Baden-Württemberg’s path towards economic recovery from the coronavirus, Baden-Württemberg Minister of Economic Affairs Dr. Nicole Hoffmeister-Kraut and ZEW President Professor Achim Wambach discussed which economic policy measures the state could adopt in order to overcome the crisis.

This is the third time the series “First-Hand Information on Economic Policy”, moderated by journalist Elif Şenel, was held in digital format for #ZEWlive.

Margrethe Vestager, Executive Vice-President of the EU Commission, has expressed concern about the “big differences” in state aid granted by the Member States in connection with the coronavirus pandemic. In particular, she fears that Germany’s aid programmes are giving its companies an advantage over those in countries whose governments cannot afford similar levels of support.

ZEW Mannheim mourns the death of Rolf Kentner, who passed away on 20 May 2020 at the age of 73. The former director of the Baden-Württembergische Bank in Mannheim was a close associate of ZEW for many years. Managing Director Thomas Kohl praises Rolf Kentner as a “valued friend and supporter, always ready to lend his knowledge and creative power to ZEW research.”
 
As representative of Baden-Württembergische Bank AG, Rolf Kentner was one of the founding members of the ZEW Sponsors’ Association for Science and Practice, serving as a board member and treasurer from 1993 to 2005. His strong commitment facilitated the establishment and subsequent rapid growth of the association, leading to the important role it continues to play today in supporting ZEW.
 
All of us at ZEW are very grateful for Mr. Kentner’s bountiful contributions; he will be greatly missed.

In light of the current coronavirus crisis, many businesses have no choice but to offer far more flexible work arrangements for their employees than they did before. Working from home is currently crucial to reduce the risk of infection at the workplace and on the way to work. In many cases, allowing employees to flexibly adapt their working hours also became inevitable due to the closure of schools and childcare facilities. In this context, a study by ZEW Mannheim shows that companies can benefit from flexible work arrangements if they provide adequate digital infrastructure for their employees.

Service providers that adopt flexible working models and make mobile devices like laptops or smartphones available to their employees tend to be more productive than others.

In the current June survey (9–17 June 2020), the CEP indicator climbs 15.7 points to a new value of 30.5 points, which is only slightly below the level of April 2020. 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.

Today, the European Council will discuss the proposals by the European Commission regarding the EU financial framework and the coronavirus recovery plan, Next Generation EU. The Commission proposed a 750-billion-euro recovery fund based on European bonds to help Member States weather the recession triggered by the coronavirus. What is at issue in the Council is not so much the size of the package as its allocation among the Member States and aid instruments. Professor Friedrich Heinemann, head of the Research Department “Corporate Taxation and Public Finance” at ZEW Mannheim, comments on this matter.
 

In June 2020, the ZEW Indicator of Economic Sentiment for Germany increased for the third consecutive time. The indicator currently stands at 63.4 points, which corresponds to a rise of 12.4 points compared with the May result. The assessment of the economic situation in Germany has improved for the first time since January 2020. In the current survey, the corresponding indicator stands at minus 83.1 points, 10.4 points higher than in the previous month.

Despite the massive drop in production on account of the coronavirus pandemic in March/April 2020, the vast majority of German workers still view their own jobs as relatively secure. This sense of security, however, does not apply to employees in short-time work schemes, people on leave of absence without continued pay, and industries particularly affected by the lockdown. These are the central findings of the latest report from the “Mannheimer Corona-Studie” (“Mannheim Coronavirus Survey”) by the University of Mannheim and ZEW Mannheim, which focuses on a subjectively assessed risk of unemployment.

For longer distances, drivers use vehicles with internal combustion engines far more often than electric cars. This not only applies to privately owned cars but especially car-sharing ones, where the cost structure for both types of driving is the same for customers. Higher purchase prices and differences in running costs between electric cars and internal combustion engines are not the only reason for the reluctance towards electric vehicles, as behavioural and non-monetary factors are also likely to play a role. Everyday distances, though, are easily accessible with a standard e-car. This is the result of a recent study by ZEW Mannheim.

Following a peak phase between 2005 and 2017, the number of mergers and acquisitions (M&A) on the European energy market almost halved between 2017 and 2019. Moreover, the transaction volume in 2019 reached its lowest level in the past 15 years. This is the result of calculations carried out by ZEW Mannheim based on the Zephyr database of Bureau van Dijk.

The number of mergers and acquisitions (M&A) involving German firms continues to decline for the second year in a row. In the second half of 2019, the ZEW-ZEPHYER M&A Index – established in 2005 to measure M&A transactions involving German companies – recorded its lowest levels. In August 2019, the index dropped to 59 points, before showing signs of recovery in the beginning of 2020.

The lockdown measures to contain COVID-19 could reinforce traditional gender roles in families. While working from home allows mothers to increase their working hours, they also have to assume more household and child-caring responsibilities, especially if fathers are unable to work from home. In about 30 per cent of households with children, the father has a more flexible working arrangement than the mother and therefore has more time for childcare and household responsibilities. In most families, however, the bulk of these tasks are carried out by women. These are the results of a ZEW expert brief from ZEW Mannheim.

In the 1990s and 2000s, the birth rate in France was about 50 per cent higher than in Germany. At the same time, France had a higher proportion of women in full-time employment. While France invested a lot of money in childcare, women in Germany often had to choose between having children and their careers. High-earning women with a university degree in particular were found to have fewer children in Germany and were more likely to postpone family planning. Women in France had more children and started working again more often between births.

This is the result of a recent study by ZEW Mannheim in cooperation with the Copenhagen Business School and the University of Strasbourg.

The coronavirus pandemic is having a major impact on the economy, with solo self-employed workers being particularly hard hit by the crisis. In a ZEW expert brief based on a survey among more than 16,000 full time self-employed individuals without employees, researchers analysed how these workers are affected by the coronavirus pandemic and in which ways digitalisation can help overcome the crisis.

Regions with a high level of social responsibility are seeing a slower spread of COVID-19 than regions with lower levels of social capital. This relationship between socially responsible behaviour and the spread of the virus was not only observed in Germany, but also in Italy, Austria, Switzerland, the UK, the Netherlands and Sweden. These are the results of a recent study conducted by a team of ZEW economists and researchers from the universities of Mannheim and Bonn.

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This issue contains a Focus on M&A with the following articles:

Melanie Arntz, Sarra Ben Yahmed and Francesco Berlingieri
Working from Home and Covid-19
The Chances and Risks for Gender Gaps

Marta F. Arroyabe, Katrin Hussinger and John Hagedoorn
Hiring New Key Inventors to Improve Firms’ Post-M&A Inventive Output

Matteo Alpino, Zareh Asatryan, Sebastian Blesse and Nils Wehrhöfer
Austerity and Distributional Policy

Zareh Asatryan and David Gomtsyan
The Incidence of VAT Evasion

Wolfgang Habla, Vera Huwe and Martin Kesternich
Beyond Monetary Barriers to Electric Vehicle Adoption: Evidence From Observed Usage of Private and Shared Cars

Cäcilia Lipowski, Ralf Wilke and Bertrand Koebel
Exploring the Puzzle of Human Reproduction: Register Data based Evidence from France and Germany

Barbara Boggiano
Long-Term Effects of the Paraguayan War (1864–1870): From Male Scarcity to Intimate Partner Violence

Irene Bertschek and Daniel Erdsiek
Soloselbstständigkeit in der Corona-Krise
Digitalisierung hilft bei der Bewältigung der Krise
(Solo Self-Employment in the Coronavirus Crisis
Digitalisation Helps to Overcome the Crisis)

Firm Dynamics in the Knowledge Economy – Indicator Study 2021

Medium-Sized Companies in the Corona Crisis Reflected in their Website Contents

Options for the Post-COVID-19 Stabilization of the Eurozone

Uniform Pricing in Healthcare Procurement

Update 2020 of the Country Index for Family Enterprises

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: Roel Beetsma (University of Amsterdam, The Netherlands)
Location of the eventt: Online via ZOOM

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

Speaker: Tingyu Zhou (Florida State University, Tallahassee, USA)
Location of the event: Online via ZOOM

Speaker: László Sandor (University of Luxembourg)
Location of the event: Online via ZOOM

Speaker: Walter D'Lima (Old Dominion University, Norfolk, USA)
Location of the event: Online via ZOOM

Speaker: Eyal Winter (The Hebrew University of Jerusalem, Israel and Lancaster University, United Kingdom)
Location of the event: Online via ZOOM

Speaker: Jack Liebersohn (The Ohio State University, Columbus, USA)
Location of the event: Online via ZOOM

Location of the event: Online via ZOOM

Doctoral/Postdoctoral Researcher (f/m/d) for the Research Department “Digital Economy”

Tenure Track Researcher (100%, f/m/d) for the Research Department “Digital Economy”

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

Picture Credits: press release of 25.06.2020: iStock.com/baona, news article of 23.06.2020: Anna Logue Fotografie/ZEW, press release of 19.06.2020: Anna Logue Fotografie/ZEW, press release of 10.06.2020: iStock.com/Galexd, press release of 02.06.2020: iStock.com/Nils Hasenau, press release of 02.06.2020: iStock.com/Georgijevic, press release of 28.05.2020: iStock.com/Photo Beto, news article of 27.05.2020: Anna Logue Fotografie/ZEW
 
All further pictures: ©ZEW