Newsletter September 2020

The German Real Estate Financing Index (DIFI) of ZEW Mannheim and JLL rises again, but remains in negative territory at minus 36 points. After a slight decline in the sentiment indicator at the beginning of the year (by minus 3.7 points) to minus 18.9 points, and a plunge of 37.8 points in the second quarter to an index level of minus 56.7 points, the DIFI has now improved by more than 20 points in the third quarter compared to the previous quarter. At present, however, the indicator continues to remain below the values registered since the the survey began in 2011.

Economics has now also come to the schools of North Rhine-Westphalia. Starting in the school year 2020/21, economics is to become a mandatory subject in all secondary schools in this state – North Rhine-Westphalia is taking the step that Baden-Württemberg took four years ago.

The German Federal Cabinet has adopted a draft law for the introduction of a digital pension platform. An information portal will be set up under the German Pension Authority (Deutsche Rentenversicherung Bund) in order to cover all three pillars of old-age provision, namely statutory, occupational, and private. The portal should be able to show how much money you have saved and what monthly pension payments you can expect at retirement. In this interview, ZEW economist Professor Tabea Bucher-Koenen talks about why a digital pension platform is so important.

Since the coronavirus-related shutdown in spring, companies and employees in Germany have made extensive use of remote working. In the digital event #ZEWlive, Professor Irene Bertschek, head of the ZEW Research Department “Digital Economy”, and Luka Mucic, CFO of SAP SE, discussed how the experience gained during the coronavirus crisis could be of benefit in the long term. This edition of the #ZEWlive digital event series focused on “COVID-19 and the Digital Economy: The Crisis as an Opportunity?”. The event was moderated by the journalist Elif Şenel and attracted about 150 spectators, who could participate in the discussion via chat.

The German Federal Cabinet plans to introduce a digital pension platform, having already adopted a draft law to this end. An information portal will be set up under the German Pension Authority (Deutsche Rentenversicherung Bund) in order to cover all three pillars of old-age provision, namely statutory, occupational, and private. The portal should be able to show how much money you have saved and what monthly pension payments you can expect at retirement. In the latest episode of the #ZEWPodcast, ZEW economist Professor Tabea Bucher-Koenen talks about why a digital pension platform is important and how knowledge about financial topics affects saving for old age.

While the first three editions were published in German, there are plans to produce English editions of the podcast as well.

The labour market was particularly hard hit by the coronavirus crisis. As a result of the pandemic, there has been a shift away from existing practices and the usual processes – which also applies to the area of human resources management. ZEW Mannheim was able to quickly adapt to these new circumstances and successfully continue its staff planning process. Over the past months, the HR department of ZEW held a total of 77 interviews and hired 14 new employees as well as an apprentice.

“While there is a great deal of uncertainty in the labour market and although we have had to find new ways to manage the application process, we were able to fill our vacancies in the research departments as planned,” says Katharina Pakebusch, head of the HR department at ZEW, summarising the situation.

In the September survey (7–16 September 2020), the CEP indicator rose by 18.3 points to a new level of 44.4 points. This is by far the highest value of the indicator since the survey began in mid-2013. 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 EU Commission has tightened the climate targets of the European Union for 2030. Instead of a carbon-reduction of 40 per cent compared to 1990 levels, the Commission will aim for a 55 per cent reduction. Professor Sebastian Rausch, head of the ZEW Research Department “Environmental and Resource Economics, Environmental Management”, comments on this matter.

The ZEW Indicator of Economic Sentiment for Germany increased again in the current September 2020 survey, climbing 5.9 points to a new reading of 77.4 points compared to the previous month. The assessment of the economic situation in Germany also improved, and currently stands at minus 66.2 points, 15.1 points higher than in August. With the increase of both the ZEW Indicator of Economic Sentiment and the assessment of the economic situation, the overall outlook has improved significantly compared to the previous month.

Today, after four years as chairman of the German Monopolies Commission, the term of office of ZEW President Achim Wambach has come to an end. In today’s meeting, the Monopolies Commission appointed the legal expert Professor Jürgen Kühling from Regensburg to be his successor. Professor Kühling has been a member of the Monopolies Commission since 1 July 2016. His research interests lie in the fields of regulation of network industries, information law and European state aid law.

The German Federal Ministry of Finance’s Working Party on Tax Revenue Estimates published the results of its unscheduled assessment. This special analysis had become necessary as the financial consequences of the crisis could not yet be properly assessed in the Working Party’s regular forecast in May 2020. The updated estimates confirm that the federal, state and municipal governments will face considerable losses in tax revenues as a result of the crisis. While in May the Working Party had still expected federal revenues of around 285 billion euros for the current year, estimates are now at 275 billion euros. This marks a decline of 54 billion euros compared to 2019.

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

Urbanisation and gentrification are leading to rapidly increasing property prices and changing population structures in German and European cities. While inequality in neighbourhoods has been decreasing, disparities between individual districts have been growing. Why are such marked shifts occurring and which policies can mitigate these inequalities? Professor Sebastian Siegloch, head of the Research Department “Social Policy and Redistribution” at ZEW Mannheim, received a prestigious funding grant from the European Research Council (ERC) as part of the European Union's research programme “Horizon 2020”, amounting to a total of 1.5 million euros, which will be paid over five years to investigate these questions.

“Rising real estate prices is a highly relevant issue for many people. It influences their place of residence, which is one of the most important choices in one’s life. We have to achieve a better understanding of how real estate markets work and how public policies such as property taxation can influence the market,” Siegloch explains.

Companies regard investment in physical capital and cloud computing as substitutes and invest more in physical capital when they have access to financial support from the state. Programmes for promoting investment in new technologies should therefore be extended to digital services so as to include companies that increasingly deal with intangible goods. This is the result of a recent study by ZEW Mannheim in cooperation with the OECD.

Germany’s “Grand Coalition” has agreed to extend the period for which the short-time work allowance can be claimed: Due to the coronavirus crisis, workers will be able to receive the allowance until the end of December 2021, which represents a 24-month extension. Professor Sebastian Siegloch, head of the ZEW Research Department “Social Policy and Redistribution”, comments on this matter.

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

Sarra Ben Yahmed, Lorenzo Cappellari, Daniele Checchi, Miles Corak, Stephen Jenkins, Guido Neidhöfer, Michèle Tertilt, and Mariano Tommasi
COVID-19 and Inequality

Nicola Fuchs-Schündeln, Dirk Krueger, Alexander Ludwig, and Irina Popova
The Long-Term Distributional and Welfare Effects of Covid-19 School Closures

Ludovica Gambaro, Guido Neidhöfer, and C. Katharina Spiess
The Effect of Early Childhood Education and Care Services on the Social Integration of Refugee Families

Terry Gregory and Ulrich Zierahn
The Big Sell: Privatizing East Germany’s Economy

Terry Gregory and Ulrich Zierahn
When the Minimum Wage Really Bites Hard: Impact on Top Earners and Skill Supply

Nicole Gürtzgen and Karolin Hiesinger
Dismissal Protection and Long-Term Sickness Absence – First Evidence from Germany

Andreas Löschel, Matthias Rodemeier, and Madeline Werthschulte
When Nudges Fail to Scale: Field Experimental Evidence from Goal Setting on Mobile Phones

Benedikt Downar, Jürgen Ernstberger, Stefan Reichelstein, Sebastian Schwenen, and Aleksandar Zaklan
The Impact of Carbon Disclosure Mandates on Emissions and Financial Operating Performance

Bernhard Ganglmair, Christian Helmers, and Brian J. Love
The Effect of Patent Litigation Insurance: Theory and Evidence from NPEs

Raphaela Andres, Timothy DeStefano, Thomas Niebel, and Steffen Viete
Capital Incentive Policies in the Age of Cloud Computing: An Empirical Case Study

Patrizia Aurich-Beerheide, Martin Brussig, Andrea Gabler, Boris Ivanov, Johannes Kirsch, Sandra Kotlenga, Philipp Langer, Barbara Nägele, Nils Pagels, Friedhelm Pfeiffer, and Laura Pohlan
Öffentlich geförderte Beschäftigung zur Förderung der Teilhabe von Langzeitarbeitslosen (Public Job Creation Scheme for the Social Integration of the Long-Term Unemployed)

Moritz Hennicke, Moritz Lubczyk, and Lukas Mergele
Die Treuhandanstalt (Eine empirische Bestandsaufnahme 30 Jahre nach der Deutschen Wiedervereinigung (An Empirical Assessment 30 Years After German Reunification)

Manuel Frondel, Gerhard Kussel, Tobias Larysch, and Daniel Osberghaus
Klimapolitik während der Corona-Pandemie: Ergebnisse einer Haushaltserhebung (Climate Policy During the COVID-19 Pandemic: Results of a Household Survey)

Sebastian Camarero Garcia, Eckhard Janeba, Sebastian Siegloch, Martin Ungerer, and Achim Wambach
Kommunale Antworten auf die globale Corona-Krise: Finanzen, Innovationskraft und Lebensqualität verbessern (Municipal Responses to the Global Coronavirus Crisis: Improving Finances, Innovative Strength and Quality of Life)

Nudging for Tax Compliance: A Meta-Analysis

The Preference for Simple Economic Policies – Causes and Remedies

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: Simon Dietz (London School of Economics and Political Science, United Kingdom)
Location of the event: Online via ZOOM

Speaker: Anna Aizer (Brown University, Providence, USA)
Location of the event: Online via ZOOM

Speaker: Christopher Roth (University of Warwick, Coventry, United Kingdom)
Location of the event: Online via ZOOM

Speaker: Daniel P. O’Brien (Compass Lexecon, Washington, D.C., USA)
Location of the event: Online via ZOOM

Speaker: Teodora Boneva (University of Zurich, Switzerland)
Location of the event: Online via ZOOM

Speaker: Liberty Mncube (FTI Consulting, Johannesburg, South Africa)
Location of the event: Online via ZOOM

Speaker: Tayfun Sönmez (Boston College, USA)
Location of the event: Online via ZOOM

Speaker: Frances Moore (University of California, Davis, USA)
Location of the event: Online via ZOOM

Speaker: Tobias Schmidt (ETH Zurich, Switzerland)
Location of the event: ZEW Mannheim

Speaker: Linus Mattauch (University of Oxford, United Kingdom)
Location of the event: Online via Zoom

Speaker: Elena Krasnokutskaya (John Hopkins University, Baltimore, USA)
Location of the event: Online via ZOOM

Speaker: Nicholas Bedard (Wilfrid Laurier University, Waterloo, Canada)
Location of the event: Online via ZOOM

Speaker: Erica Myers (University of Illinois at Urbana-Champaign, USA)
Location of the event: Online via ZOOM

Speaker: Gregor Jarosch (Princeton University, USA)
Location of the Event: Online via ZOOM

Speaker: Daniela Seeliger (Linklaters, Germany, and King's College, London, United Kingdom)
Location of the Event: Online via ZOOM

Speaker: Edward Glaeser (Harvard University, Cambridge, USA)
Location of the event: Online via ZOOM

Speaker: Shengwu Li (Harvard University, Cambridge, USA)
Location of the event: Online via ZOOM

Picture Credits: news article of 17.09.2020: Anna Logue Fotografie / ZEW, news article of 17.09.2020: Anna Logue Fotografie / ZEW, press release of 16.09.2020: Anna Logue Fotografie / ZEW, press release of 10.09.2020: iStock.com/LiKimGoh, press release of 03.09.2020: iStock.com/RomanBabakin, press release of 03.09.2020: iStock.com/MARHARYTA_MARKO, press release of 27.08.2020: Anna Logue Fotografie / ZEW
All further pictures: ©ZEW