Newsletter October 2020

How can tax systems create the right incentives for a sustainable economy and society while ensuring that government spending is sufficiently covered? These are some of the questions addressed at this year’s Annual Conference of the Leibniz ScienceCampus MannheimTaxation. Due to the coronavirus pandemic, the conference, which attracted over 260 participants from all over the world, was held exclusively online for the first time.

According to information provided by the Robert Koch Institute (RKI), the coronavirus contact-tracing app has been downloaded more than 18 million times. In light of the rise in infection rates, there is hope that the app will facilitate the tracking of chains of infection in the cold winter months ahead and that it will help to control outbreaks of the virus.

Accompanied by the weekly protests from the Fridays for Future movement, the German government debated various climate policy instruments and measures within the scope of its so-called “Climate Cabinet” in 2019. The final result was the climate package, a compromise that evoked both praise as well as strong criticism in the public discussion. Students at the University of Mannheim got to know which precise balance of interests, conflicting goals, strategies, and political effects should be taken into account when developing an effective climate policy on a national scale during the “Climate Cabinet” simulation game at ZEW Mannheim on 10 October 2020.

Within the space of a few days in September, EU Commission President Ursula von der Leyen and German economic minister Peter Altmaier both publicly called for the creation of a climate-neutral economy by 2050. Each of their proposed initiatives focuses on augmenting CO₂ reductions. But the success of European and German climate policies will depend on more than meeting climate targets alone.

This year, the grand final of the YES! high school student competition was held digitally from 21 to 23 September 2020 due to the coronavirus pandemic. This did, however, not break the spirit of the YES! competition; quite the contrary, the students were highly motivated to present their innovative ideas and discuss them with economic experts, turning this year’s grand finale into a special event despite not being physically present. With their proposal for a procedure to effectively allocate childcare places, the student team mentored by ZEW Mannheim took the second place.

The European Green Deal is an ambitious climate action plan by the European Union. Its implementation leaves a number of questions unanswered. During the European Evening at ZEW Mannheim, Baden-Württemberg’s Minister of Science, Theresia Bauer, former EU Commissioner, Günther H. Oettinger, as well as the director of the Potsdam Institute for Climate Impact Research, Ottmar Edenhofer, and president of ZEW, Achim Wambach, discussed what exactly is needed in order for Europe to become carbon neutral by 2050. Due to the COVID-19 pandemic, an exclusive group of participants comprising 30 guests was permitted to attend the event in person. Individuals who were interested in the event, but were not able to physically attend, were still able to follow the opening ceremony of the closure of the SEEK research programme via a live stream from their screens at home. Journalist Johannes Pennekamp moderated the panel discussion at the event.

Five years ago, Angela Merkel coined the now famous phrase “Wir schaffen das” (“We can do it”) in the midst of a crisis situation, as more and more migrants made their journey to Europe on the Balkan route. But what can the countries that take in immigrants do to integrate them? What consequences can be expected from accepting and integrating immigrants with regard to the attitudes towards migration issues in these countries? These and other questions were discussed at the international workshop “Immigration, Integration and Attitudes” that took place on 22 and 23 September 2020 at ZEW Mannheim.

The Mannheim Centre for Competition and Innovation (MaCCI), a joint initiative of ZEW and the University of Mannheim, is pleased to announce its 2021 annual conference on 11 and 12 March 2021. The conference provides a platform for exchange and discussion on topics in competition- and innovation-related research. Researchers are invited to submit papers from all fields of competition law and economics. Theoretical and empirical papers as well as case studies are welcome. We especially encourage legal experts to submit contributions with a focus on EU competition law and/or comparative competition law. Please submit full papers in PDF format to MacciAnnual2021@zew.de no later than 30 November 2020.

ZEW Mannheim is pleased to announce a two-day conference on ageing and financial markets on 11 and 12 February 2021. The conference provides a stimulating environment for in-depth debates on the effects of demographic change on financial markets and their various players, on the policy implications of recent research, and on new research questions arising from policy responses. Keynotes will be given by Professor Monika Buetler, University of St. Gallen in Switzerland, and Professor Michael Haliassos, Goethe University Frankfurt am Main. At this stage, we are planning a face-to-face workshop. However, should travel restrictions prevent this, we will switch to an online event or a mix of face-to-face and online participation. We invite empirical and theoretical submissions with a microeconomic focus on all aspects related to ageing and financial markets. Please submit full papers only to FMconference@zew.de no later than 15 November 2020.

ZEW Mannheim is pleased to announce this year’s PhD workshop in co-operation with Copenhagen Business School, the École Polytechnique Fédérale de Lausanne, Ghent University, KU Leuven, the University of Luxembourg, and the Technical University Munich on 10 and 11 December 2020. The workshop offers young researchers the opportunity to discuss their work with experienced scholars and fellow students. It is particularly aimed at PhD students working in the fields of innovation, entrepreneurship and competition economics. Due to the COVID-19 pandemic, this workshop will take place online via video conference. However, a limited number of participants may be able to attend the event at ZEW Mannheim in person, depending on the circumstances and regulations that will apply at that time. PhD students are invited to present either early stage work or fully completed papers. Please indicate the stage of the presented paper in your application. Time slots will be assigned according to the development stage of the submitted work. Please submit your application to marius.berger@zew.de no later than 20 November 2020.

Dr. Laura Pohlan, a researcher in the ZEW Research Group “Market Design”, received the 2020 “Forschungspreis Soziale Markwirtschaft” (“Social Market Economy Research Award”) by the Roman Herzog Institute (RHI) Munich on 7 October 2020. She was awarded the third prize for her dissertation on the social consequences of unemployment and the effects of direct and indirect state measures on employment. She wrote her dissertation while still working in the ZEW Research Department “Labour Markets and Human Resources”. The award ceremony was held online.

Under the new own resources decision, the EU has secured an entitlement to financial contributions from its Member States until 2058, which it does not even remotely need to finance the coronavirus recovery plan. A new study by ZEW quantifies this excess cover at ten times of what would actually be needed to repay the debt from the coronavirus recovery plan totalling 750 billion euros.

EU Member States have agreed on a reform of the Common Agricultural Policy (CAP). After almost two days of negotiations, the Member States have approved a compromise proposal made by the German presidency of the Council of the EU. Professor Friedrich Heinemann, head of the Research Department “Corporate Taxation and Public Finance” at ZEW Mannheim, comments on this matter.

Childcare provision is the most frequently suggested measure to mitigate the “child penalty” for mothers, who often bear financial losses after having a child, usually in the form of declining incomes. The pay gap between men and women begins to widen after the birth of the first child. The differences in pay result in major consequences for lifelong labour earnings and pensions as well as a higher risk of poverty for women. ZEW economist Michaela Slotwinski and a team of researchers examined this relationship more closely. The lack of daycare places is perceived to be the greatest obstacle preventing mothers with small children from working at all or working more hours and is the reason why family incomes often decrease after the birth of the first child.

In the October survey (6–14 October 2020), the CEP indicator rose by 5.6 points to a new level of 50.0 points. This marks a new record high of the indicator since the survey began in mid-2013. Although the increase is slightly lower than in the previous month, when the indicator jumped by 18.3 points, optimism regarding the Chinese economy is still growing quite strongly. 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.

Corporations with well-established digital infrastructure are using this for more aggressive tax planning in contrast to corporations with little digital know-how. What this means is that these corporations can relocate their company-wide profits more efficiently to European countries with low tax rates and are therefore able to reduce their effective tax rate, as a joint study conducted by ZEW Mannheim and University of Mannheim suggests. “The profits declared by subsidiaries of international companies are higher in those countries where tax rates are lower.

This correlation is more distinct among businesses with digital infrastructure, for example, enterprise resource planning (ERP) systems which companies use to plan, control and manage their resources,” says Christopher Ludwig, a researcher in the ZEW Research Department “Corporate Taxation and Public Finance” and co-author of the study. This effect has been found to be even stronger if a head of department in accounting is present at these multinationals. “They then have the expertise to hand, which enables them to put additionally acquired information, obtained through analyses of internal data, to further use for tax planning,” Daniel Klein, a researcher at the University of Mannheim and also co-author of the study, explains.

German education policy has so far been strongly federalist. The ministers of education have now concluded a state-level agreement to improve the comparability of school-leaving certificates and examinations, which will be presented to the minister presidents of the federal states. This decision is in line with the key results of a survey conducted by ZEW Mannheim between May and July 2020 among state parliamentarians in all 16 German states. According to the survey, the majority of the interviewed state parliamentarians (87 per cent) consider the comparability of student performance to be important. At 76 per cent, the majority of the respondents also support the reform proposal to introduce regular comparative tests. In addition, most of them would like the federal government to contribute more to the costs of education.

A recent study conducted by ZEW Mannheim together with the University of Basel and the University of Malmo has found that the right of foreigners to vote affects integration: immigrants’ likelihood of acquiring citizenship changed when they previously had the chance to participate in an election as non-citizen residents. The specific effect of voting rights on naturalisation differed depending on the level of socioeconomic development in foreign residents’ particular country of origin.

World Trade Organization (WTO) mediators have decided that the EU can apply tariffs on US imports. The decision was taken after the USA granted unlawful subsidies to aircraft manufacturer Boeing. Professor Friedrich Heinemann, head of the Research Department “Corporate Taxation and Public Finance” at ZEW Mannheim, comments on this matter.

The ZEW Indicator of Economic Sentiment for Germany declined very sharply in the current October 2020 survey, plummeting 21.3 points to a new reading of 56.1 points. By contrast, the assessment of the economic situation in Germany improved again, and currently stands at minus 59.5 points, 6.7 points higher than in September.

The 2020 Nobel Prize in Economics has been awarded to the US economists Paul Milgrom and Robert Wilson for their contributions to auction theory. Professor Achim Wambach, president of ZEW Mannheim, comments on this matter.

Besides severe social and economic cutbacks, the COVID-19 pandemic is putting many people in financial difficulties. This applies above all to people on low incomes or to occupational groups that are particularly affected by the pandemic. An interdisciplinary team of researchers from the University of Mannheim, ZEW Mannheim and the Leibniz Institute for Resilience Research in Mainz will now investigate how people in Germany deal with coronavirus-related financial shocks. The project partners contribute their perspectives of economic and business education (Professor Carmela Aprea, University of Mannheim), household economics (Professor Tabea Bucher-Koenen, ZEW Mannheim) and psychological resilience research (Professor Klaus Lieb and Dr. Donya Gilan, Leibniz Institute for Resilience Research) to the research.

The German government has presented a first draft of its data strategy, which is being discussed today in the Cabinet Committee on Digitalisation. One of the goals of the strategy is to secure access to data and improve their availability. Professor Irene Bertschek, head of ZEW’s Research Department “Digital Economy”, comments on this matter.

School closures reinforce existing inequalities related to a student’s socioeconomic background. This is particularly true for the first two years of primary school, as an expert brief by ZEW Mannheim shows. These inequalities affect not only important academic skills such as mathematics and literacy, but also perseverance and the ability to concentrate. “From an epidemiological perspective, school closures have been unavoidable. But they have significant side effects,” says Dr. Guido Neidhöfer, ZEW education economist from ZEW’s “Labour Markets and Human Resources” Department and co-author of the expert brief.

“This is especially true the longer they last. So, without a suitable framework to allow learning at home, school closures jeopardise the efforts toward equality in education made by education policy,” Neidhöfer concludes. The authors of the expert brief would like to see policymakers to support the development of digital learning formats in order to reach all children even during school closures.

Against strong opposition from Poland and Hungary, the German presidency of the Council of the European Union has proposed a procedure that would cut off EU funds to countries that violate the rule of law. As a response, both governments have threatened to block the 750-billion-euro coronavirus recovery package of the EU. A recently published report found deficits in Poland and Hungary regarding judicial independence, the fight against corruption and media freedom. Professor Friedrich Heinemann, head of the Research Department “Corporate Taxation and Public Finance” at ZEW Mannheim, 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

Maximilian Bach, Guido Neidhöfer, Sarah McNamara, and Friedhelm Pfeiffer
Rethinking Schooling
On the Effects of School Closures on the Competence Development of Primary School Children and the Need for Equality in Education Provision

Svenja Lorenz and Thomas Zwick
Money Also Is Sunny in a Retiree’s World

Michaela Slotwinski, Alois Stutzer, and Pieter Bevelander
From Participants to Citizens? Democratic Voting Rights and Naturalization Behavior

Stephen Comello, Gunther Glenk, and Stefan Reichelstein
Cost-Effcient Transition to Clean Energy Transportation Services

Maximilian Bach and Stephan Sievert
Birth Cohort Size Variation and the Estimation of Class Size Effects

Robert Clarke, Decio Coviello, and Adriano De Leverano
Complementary Bidding and the Collusive Arrangement: Evidence from an Antitrust Investigation

Daniel Klein, Christopher Ludwig, and Katharina Nicolay
How Do Taxes Affect the Trading Behavior of Private Investors? Evidence from Individual Portfolio Data

Matthias Krapf, Anja Roth, and Michaela Slotwinski
The Effect of Childcare on Parental Earnings Trajectories

Annette Hillerich-Sigg
Transitions from Lower Track Secondary Schools into Vocational Training: Does a Detour Pay Off?

Vera Huwe and Johannes Gessner
Are there Rebound Effects from Electric Vehicle Adoption? Evidence from German Household Data

Florian Buhlmann, Philipp Dörrenberg, Benjamin Loos, and Johannes Voget
How Do Taxes Affect the Trading Behavior of Private Investors? Evidence from Individual Portfolio Data

Thomas Niebel, Patrick Breithaupt, Reinhold Kesler, and Christian Rammer
Intangible Capital Indicators Based on Web Scraping of Social Media

Sebastian Blesse and Justus Nover
Landespolitiker befürworten mehr Vergleichbarkeit im föderalen Bildungssystem (Politicians at State Level in Favour of Increasing Comparability in the Federal Education System)

Melanie Arntz, Katharina Dengler, Ralf Dorau, Terry Gregory, Matthias Hartwig, Robert Helmrich, Florian Lehmer, Britta Matthes, Anita Tisch, Sascha Wischniewski and Ulrich Zierahn
Digitalisierung und Wandel der Beschäftigung (DiWaBe) – Eine Datengrundlage für die interdisziplinäre Sozialpolitikforschung (Digitization and Changing World of Work – A Data Basis for Interdisciplinary Socio-Political Research)

Achim Wambach
CO₂ bepreisen, Energieträgerpreise reformieren (Pricing CO₂, Reforming Energy Carrier Prices)

Boris Ivanov, Friedhelm Pfeiffer and Laura Pohlan
Evaluation des Bundesprogramms Soziale Teilhabe am Arbeitsmarkt. Fünfter Bericht – Wirkungen nach Programmende (Evaluation of the Federal Programme ‘Social Inclusion in the Labour Market’. Fifth Report – Effects After the End of the Programme)

Christian Rammer, Florence Blandinières, Bettina Peters, Martin Hud, and Georg Licht
Höhe von Fördersätzen in der steuerlichen FuE‐Förderung (Amount of Subsidies in the Fiscal R&D Funding)

Daniel Osberghaus, Martin Achtnicht, Philip Bubeck, Manuel Frondel, Vanessa Charlotte Kükenthal, Tobias Larysch, and Annegret Thieken
Klimawandel in Deutschland: Risikowahrnehmung und Anpassung in privaten Haushalten 2020 (Climate Change in Germany: Risk Perception and Adaptation in Private Households 2020)

Achim Wambach
Netzengpässe als Herausforderung für das Stromversorgungssystem (Grid Bottlenecks as a Challenge for the Power Supply System)

Christian Rammer, Sandra Gottschalk, and Lena Füner
Studie zur Evaluation des KfW‐Förderprogramms „ERP‐Digitalisierungs‐
und Innovationskredit“ (Study on the Evaluation of the KfW Support Programme “ERP Digitalisation and Innovation Credit”)

Innovation Challenges in the Metropolitan Region Rhine-Neckar

Tax Loss Restrictions, Investor Exits and Market Prices

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: Sandra E. Black (Columbia University, New York City, USA)
Location of the event: Online via ZOOM

Speaker: Huan Tang (London School of Economics and Political Science, United Kingdom)
Location of the event: Online via ZOOM

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

Speaker: Cormac O’Dea (Yale University, New Haven, USA)
Location of the event: Online via ZOOM

Speaker: Elias Carroni (Università di Bologna, Italy)
Location of the event: Online via ZOOM

Speaker: Annegret Groebel (Bundesnetzagentur, Bonn)
Location of the event: Online via ZOOM

Speaker: Regina Riphahn (Friedrich-Alexander-Universität Erlangen-Nürnberg (FAU))
Location of the event: Online via ZOOM

Speaker: Xiao Lin (Pennsylvania State University, State College, USA)
Location of the event: Online via ZOOM

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

Speaker: Eeva Mauring (University of Bergen, Norway)
Location of the event: Online via ZOOM

Speaker: Christopher S. Yoo (Penn Law, University of Pennsylvania, Philadelphia, USA)
Location of the event: Online via ZOOM

Speaker: Atılım Seymen (Deutsche Bundesbank, Frankfurt am Main)
Location of the event: Online via ZOOM

Speaker: Grace Nacimiento (GvW Graf von Westphalen Rechtsanwälte Steuerberater Partnerschaft mbB, Hamburg)
Location of the event: Online via ZOOM

Location of the event: Online via ZOOM

Tenure Track Postdoctoral Researcher (f/m/d) for the Research Department "Environmental and Resource Economics, Environmental Management"

Tenure Track Postdoctoral Researcher (f/m/d) for the Research Department "Social Policy and Redistribution"

Tenure Track Postdoctoral Researcher (f/m/d) for the Research Department "International Finance and Financial Management"

Picture Credits: press release of 26.10.2020: iStock.com/Akexandros Michailidis, press release of 21.10.2020: Anna Logue Fotografie/ZEW, press release of 20.10.2020: iStock.com/BraunS, press release of 19.10.2020: iStock.com/MicroStockHub, news article of 15.10.2020: Anna Logue Fotografie/ZEW, press release of 15.10.2020: iStock.com/bizoo_n, news article of 14.10.2020: YES! – Young Economic Summit, press release of 14.10.2020: Anna Logue Fotografie/ZEW, press release of 12.10.2020: Anna Logue Fotografie/ZEW, news article of 09.10.2020: Erich Dichiser EDM, press release of 08.10.2020: iStock.com/CentralITAlliance, press release of 07.10.2020: Anna Logue Fotografie/ZEW, press release of 05.10.2020: iStock.com/akshmiprasad_Snews article of 08.10.2020: iStock.com/Nastco/dem10, press release of 08.10.2020: iStock.com/CentralITAlliance, press release of 07.10.2020: Anna Logue Fotografie/ZEW, press release of 05.10.2020: iStock.com/akshmiprasad_S
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