Newsletter March 2021

Whether you are interested in doing an internship, work as a student assistant or getting started in science: ZEW Mannheim – as one of the leading economic research institutions in Europe – is the ideal place to kick-start your career. This year, the ZEW human resources department will once again attend the University of Mannheim’s CareerFair to provide information on career options at ZEW. Students will have the opportunity to ask members of the HR team career-related questions on 28 April 2021 between 9 a.m. and 4 p.m. via the digital platform “talentspace”.

This year marked the tenth anniversary of the Annual Conference of the Mannheim Centre for Competition and Innovation (MaCCI), which was jointly organised by ZEW Mannheim and the University of Mannheim on 11 and 12 March 2021. This was the first time that the conference took place as an online event. With a total of 270 participants and 22 parallel sessions, this was the largest MaCCI conference ever held.

In February 2021, the Commission of Experts for Research and Innovation (EFI) presented its annual report to the German Chancellor Dr. Angela Merkel. As part of the lecture series “First-Hand Information on Economic Policy”, Professor Irene Bertschek, head of the ZEW Research Department “Digital Economy” and EFI member, and Rafael Laguna de la Vera, founding director of the Federal Agency for Disruptive Innovation (SPRIN-D), discussed the EFI report as well as ways to promote disruptive innovations in Germany. The event was supported by the ZEW Sponsors’ Association for Science and Practice and held within the framework of the SEEK research programme.

The US Nasdaq, or Nasdaq OMX Group since 2008, is the second largest stock exchange in the world with its headquarters in New York. As the first electronic stock exchange, it has attracted in particular innovative technology companies. Still to this day, several hundred high-tech start-ups annually go for a stock market listing on the so-called ‘technology exchange’, whilst new issuances in Germany are predominantly from traditional sectors.

2015 and 2016 are etched on people’s minds as the years characterised by the so-called ‘refugee crisis’. Over a million people fled war-torn countries and ultimately sought asylum in Germany. Dr. Katrin Sommerfeld discusses in the eighth edition of the #ZEWPodcast ‘Wirtschaft · Forschung · Debatten’/‘Economy · Research · Debates’ what the successful integration of refugees into the German labour market depends on, how successful this integration has already been since 2015, and what impact the coronavirus pandemic is having on the employment of refugees.

The German Real Estate Finance Index (DIFI) by ZEW Mannheim and JLL continues its recovery in the first quarter of 2021. Despite the gain, it still remains in the red with a total of minus 14 points (plus 9.5 points compared to the previous quarter). Both the current financial situation and the financing outlook for the forthcoming six months are assessed more positively than at the end of the fiscal year 2020.

According to the survey participants, the outlook is bleak for the retail sector, which is struggling due to the lockdown brought about by the coronavirus pandemic. By contrast, there is more of a positive outlook regarding the financing situation for office and hotel properties in the next six months.

‘Exponential growth’ should have been the expression of the year 2020. In the mathematics courses of coming decades, the coronavirus is sure to serve as a prime example of exponential growth. Yet the virus is not the only factor in our lives that exhibits an exponential growth function.

Do all Americans pay a fair amount of tax? Not at all. On the contrary, there is a huge disparity in the taxation of average workers and the taxation of the wealthy, especially the super-rich, according to UC Berkeley Associate Professor Gabriel Zucman. On 10 March 2021, the economist presented his new book ‘The Triumph of Injustice: How the Rich Dodge Taxes and How to Make Them Pay’ virtually at ZEW Mannheim, which he wrote together with Emmanuel Saez. Zucman is also leading the newly established European Tax Observatory that has commenced its work in 2021.

ZEW President Professor Achim Wambach moderated the third edition of #ZEWBookTalk.

What role does information play for policymaking in the area of climate protection? Can information have a political impact if this information reaches citizens and provides incentives for climate-friendly behaviour? Last week, representatives from the realms of academia, business, policymaking and society discussed how these questions can be approached at the national and European level within the framework of the Forum Climate Economics 8. The forum was organised as a virtual event, allowing an audience of around 250 viewers to follow the discussion and participate via chat.

What will be left of our houses, savings and pensions in times of low interest rates? What distinguishes sustainable start-up companies from other firms? How can refugees be successfully integrated into the labour market – especially in light of the pandemic? How can we get young people excited about economics? These are some of the questions that will be tackled by the student teams participating in the 2021 YES! – Young Economic Summit, Germany’s biggest school competition on economic issues. Researchers of ZEW will mentor and support the students during the competition.

The Bundestag will make a final decision today on whether Germany will approve the EU’s own resources decision. This decision paves the way for joint EU borrowing of 750 billion euros to finance the European coronavirus recovery package. Professor Friedrich Heinemann, research department head and public finance expert at ZEW Mannheim, comments on this matter.

In the March 2021 survey (9–17 March 2021), the CEP indicator decreased by 21.2 points to a new value of 42.8 points. Despite this sharp decline, the indicator remains at a very high level. The CEP indicator, based on the China Economic Panel (CEP) and conducted by ZEW Mannheim in cooperation with Fudan University, Shanghai, reflects the economic expectations of international financial market experts for China on a 12-month basis.

According to financial market experts, the German banking sector is likely to face a rising number of loan defaults and a growing need to make additional provisions for corporate loans in the coming six months. In addition, they anticipate a slight increase in consolidation among savings banks and cooperative banks. These are the results of a special question featured in the most recent ZEW Financial Market Survey carried out in March 2021 among 189 financial market experts.

The electricity price should not be set uniformly nationwide, as has been the case in Germany so far, but should take into account the local physical conditions of the grid. This is the result of a recent research paper published by a consortium consisting of the Technical University of Munich, FIM / Fraunhofer FIT, DIW Berlin, the Institute of Energy Economics at the University of Cologne (EWI) and ZEW Mannheim within the framework of the Kopernikus project ‘SynErgie’ funded by the German Federal Ministry of Education and Research and coordinated by Project Management Jülich (PtJ).

The property tax burden of poorer tenants is more than four times higher than the burden of richer tenants. Landlords are able to fully pass through the tax to rental prices after three years. On the other hand, sales prices do not react to tax changes. A recent study by ZEW Mannheim in cooperation with Maastricht University confirms this. The property tax is therefore a regressive tax. Relatively speaking, it burdens households with lower incomes more than households with a higher financial standing.

The ZEW Indicator of Economic Sentiment for Germany increased again in the current March 2021 survey, climbing 5.4 points to a new reading of 76.6 points compared to February. This means that since December 2020, the indicator has recorded a rise of more than 20 points.The assessment of the economic situation in Germany is also more positive than in the previous month, and currently stands at minus 61.0 points, 6.2 points higher than in February. The assessment of the situation has thus slightly improved by 5.5 points since December 2020.

In Germany, customers usually receive their electricity, water and gas bills once per year. A recent study of ZEW Mannheim shows that this type of billing leads to more utility consumption. Paying these bills immediately could provide incentives to reduce consumption.

The Federal Ministry of Finance and the Federal Ministry for Labour and Social Affairs have released a white paper which should lay the foundation for an increase in the minimum wage. Professor Sebastian Siegloch, head of ZEW’s Research Department “Social Policy and Redistribution”, comments on this matter.

Women are less involved in the stock market and other financial activities concerning wealth accumulation compared to their male counterparts. This is not only attributable to actual gaps in women’s financial literacy, but also to a lack of self-confidence. Women frequently underrate their actual financial knowledge. These are the findings of a study conducted by ZEW Mannheim in cooperation with the Global Financial Literacy Excellence Center (GFLEC) at the George Washington University School of Business, the University of Groningen, and the Dutch central bank, De Nederlandsche Bank (DNB).

Women on the board of companies have a positive impact on their value. Crucially, the quota for women in corporate management – also known as a boardroom quota – primarily results in the scaling down of inefficient corporate processes. These are the findings of a study conducted by ZEW Mannheim and the New Economic School in Moscow. The study examined both the corporate board structure and the characteristics of its board members in seven European countries with regulations concerning this quota, which range from light to rigorous.

A further step was to investigate the effects of the quota on firms’ value and operations, using financial data on the years before the quota was announced and after the compliance date had passed.

At the invitation of the German Federal Cartel Office, leaders and competition experts from various countries are discussing current issues of cartel law at the 20th International Conference on Competition today alongside Federal Minister of Economic Affairs and Energy Peter Altmaier and EU Competition Commissioner Margrethe Vestager. One of the focal points of this year’s event will be a panel discussion with Professor Achim Wambach, president of ZEW Mannheim and member of the Monopolies Commission, on public welfare goals as a challenge for antitrust practice. Wambach comments on this matter.

The economic consequences of the pandemic will be felt in Germany and around the world for some time to come. Together with the presidents of the six German economic research institutes of the Leibniz Association, the president of ZEW Mannheim, Professor Achim Wambach, today discussed “The Economic Consequences of the Pandemic” at the annual Leibniz Economic Summit.

In response to the first COVID-19-related lockdown, particularly small and medium-sized enterprises in Germany received easy access to extensive state aid in order to strengthen the liquidity position of cash-strapped firms. For the most part, this was done in a ‘whatever-it-takes’ fashion to rescue as many firms as possible from insolvency. Clearly, it has been necessary to support healthy companies whose financial difficulties have been the result of the pandemic and the associated measures.

However, struggling companies whose existence would have been under threat even without the lockdown also received financial aid. Due to the urgency of the measures, they were implemented in an untargeted manner, which – in addition to generating direct costs in the billions – could also have negative consequences for medium-term growth opportunities and productivity development in Germany. As a recent study by ZEW Mannheim shows, the untargeted financial support has contributed to a backlog of corporate insolvencies. In particular, very small, financially weak companies, which under normal economic circumstances would have been highly likely to file for insolvency, were kept alive without the prospect of successful recovery.

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

Elisa Rottner and Kathrine von Graevenitz
What Drives Carbon Emissions in German Manufacturing: Scale, Technique or Composition?

Max Löffler and Sebastian Siegloch
Welfare Effects of Property Taxation

Benoît Le Maux, David Masclet, and Sarah Necker
Monetary Incentives and the Contagion of Unethical Behavior

Annabelle Doerr and Sarah Necker
Collaborative Tax Evasion in the Provision of Services to Consumers – a Field Experiment

Olga Kuzmina and Valentina Melentyeva
Gender Diversity in Corporate Boards: Evidence From Quota-Implied Discontinuities

Zareh Asatryan and David Joulfaian
Taxes and Business Philanthropy in Armenia

Thorsten Doherr
Disambiguation by Namesake Risk Assessment

This issue contains a Focus on Innovation with the following articles: German Economy Remains on Course for Innovation Despite the Pandemic

Max Bach and Mira Fischer
Mit verbindlichen Grundschulempfehlungen erreichen Grundschüler/innen bessere Leistungen, empfinden aber auch mehr Stress (Binding Recommendations for Secondary School Choice Increase Primary School Pupils’ Performance, But Also Their Stress Levels)

2021 Data-Report on Innovation Behaviour of Saxony’s Economy

Immediate Action Tax Program and Starting Points for the Increase of Entrepreneurial Investments in the Context of the Coronavirus Crisis in Germany

Innovation Indicators for Chemicals and Pharmaceuticals 2021

Labor Market Consequences of Covid-19 and the Digital Transformation

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: Matthew Mitchell (University of Toronto, Canada)
Location of the event: Online

Speaker: Alvaro Parra (The University of British Columbia, Vancouver, Canada)
Location of the event: Online

Speaker: Elizabeth Caucutt (Western University, London, Canada)
Location of the event: Online

Speaker: Thomas Weck (German Monopolies Commission)
Location of the event: Online

Speaker: Myrto Kalouptsidi (Harvard University, Cambridge, USA)
Location of the event: Online

Speaker: Simon Martin (Heinrich Heine University Düsseldorf)
Location of the event: Online

Speaker: Cinzia Alcidi (Centre for European Policy Studies (CEPS), Brussels, Belgium, and LUISS School of European Political Economy, Rome, Italy), Volker Wieland (Institute for Monetary and Financial Stability, Goethe University Frankfurt am Main), and Friedrich Heinemann (ZEW)
Location of the event: Online

Speaker: Roland Strausz (Humboldt-Universität zu Berlin)
Location of the event: Online

Speaker: Wouter Botzen (VU Amsterdam, the Netherlands)
Location of the event: Online

Speaker: Arthur van Benthem (The Wharton School, The University of Pennsylvania, Philadelphia, USA)
Location of the event: Online

Speakers: Oriana Bandiera (London School of Economics and Political Science, UK) and Dmitry Taubinsky (University of California, Berkeley, USA)
Location of the event: Online

Speaker: Marit Hinnosaar (University of Nottingham, United Kingdom)
Location of the event: Online

Location of the event: Online

Speaker: Lucas Davis (University of California, Berkeley, USA)
Location of the event: Online

Speaker: Nima Haghpanah (The Pennsylvania State University, University Park, USA)
Location of the event: Online

Speakers: Christiane Baumeister (University of Notre Dame, USA), Kenneth Gillingham (Yale University, USA), Ashley Langer (University of Arizona, USA), and Erik T. Verhoef (VU Amsterdam, the Netherlands)
Location of the event: ZEW Mannheim and online

Speaker: Heski Bar-Isaac (University of Toronto, Canada)
Location of the event: Online

Speaker: Yeon-Koo Che (Columbia University, New York, USA)
Location of the event: Online

Picture Credits: news article of 29.03.2021: iStock.com/PeopleImages, press release of 25.03.2021: Anna Logue Fotografie, news article of 22.03.2021: Anna Logue Fotografie/ZEW, press release of 19.03.2021: iStock.com/jpique, press release of 19.03.2021: iStock.com/kflGALORE, news article of 17.03.2021: JLL and ZEW, press release of 17.03.2021: iStockphoto.com/sureeporn, news article of 15.03.2021: Anna Logue Fotografie/ZEW, press release of 15.03.2021: iStockphoto.com/SolStock, press release of 09.03.2021: Anna Logue Fotografie/ZEW, press release of 08.03.2021: iStock.com/sutlafk, press release of 05.03.2021: iStock.com/fizkes, press release of 04.03.2021: Anna Logue Fotografie/ZEW, press release of 26.02.2021: iStock.com/trgowanlock, news article of 25.02.2021: YES!–Young Economic Summit
All further pictures: ©ZEW