Newsletter June 2021

On 10 and 11 June 2021, the ZEW Research Department “Digital Economy” organised the 19th Conference on the Economics of Information and Communication Technologies, which covered a broad range of topics in the field of digitalisation. This year, as in 2020, it took place virtually again due to the pandemic. The event has been one of the most important scientific conferences in the field of digital economy for years. This was once again demonstrated by the more than 100 papers submitted and around 300 participants who registered for this year’s edition.

On 1 July 2021, ZEW Mannheim and Bureau van Dijk Electronic Publishing GmbH will organise a free online seminar in English from 11 am to noon. Three researchers from renowned European research institutions will show which projects they are working on and how they use information from the Orbis and Zephyr databases provided by Bureau van Dijk for their economic analyses.

Jobs, fast internet, good public transport connections – many things are unequally distributed across regions in Germany and Europe. But how can we create equal living conditions and how much equality do we need? These and other questions were discussed on 23 June 2021 by Constanze Krehl, Member of the European Parliament from Saxony, and ZEW expert Professor Sebastian Siegloch, head of the ZEW Research Department “Social Policy and Redistribution”, in the digital event series #ZEWlive. The debate was moderated by journalist Jessica Sturmberg.

The German Real Estate Finance Index (DIFI) by ZEW Mannheim and JLL increased for the fourth time in a row and is only slightly negative in the second quarter of 2021 at minus 3.3 points (plus 10.7 points compared to the previous quarter). The current market situation as well as the market expectations for the next six months have again improved significantly. The expectations indicator jumped into positive territory with a plus of 13.9 points, reaching its highest level since the end of 2015.

Fighting climate change is an enormous challenge. To avert potentially catastrophic global warming the EU intends to become climate neutral by 2050. Among other measures, carbon pricing is anticipated to play a key role. In this interview, Professor Sebastian Rausch explains how greenhouse gas emissions can be reduced in market economies.

On 20 and 21 May 2021, around 140 energy and environmental economists from Germany and abroad participated online in the ninth Mannheim Conference on Energy and the Environment. International researchers and experts discussed various topics of the energy industry for two days. This year, the conference organised by ZEW Mannheim focused on energy efficiency, electricity markets, mobility and carbon pricing.

The research award ‘Future of the Working World’ 2020 has been officially handed over to the laureates. In the presence of ZEW Managing Director Thomas Kohl and former ZEW President Professor Wolfgang Franz, who gave the laudatory speech, the two winners received the award from Carsten Müller, spokesman of the board of Volksbank Kurpfalz. Every year, the Volksbank Weinheim Stiftung and ZEW Mannheim honour outstanding dissertations and master’s theses in the field of economics.

Economic experts expect the price increases in the euro area to be temporary. They have scarcely changed their forecasts for economic growth in the euro area. For the German economy, they expect only below-average growth in comparison. This is the result of the business cycle tableaus by ZEW Mannheim and the German daily newspaper, Börsen-Zeitung.

Public debt levels have skyrocketed as a result of the COVID-19 crisis. In order to bridge the massive financing gaps in public budgets, policymakers are shifting their focus of attention on corporate taxation. However, corporate tax rates differ greatly in international comparison.

Climate change is one of the central challenges of our time. In order to become carbon-neutral by 2050, Germany and Europe must significantly reduce CO₂ emissions in the coming years. In the tenth episode of the #ZEWPodcast ‘Wirtschaft · Forschung · Debatten’/‘Economy · Research · Debates’, Professor Sebastian Rausch, head of the Research Department “Environmental and Resource Economics, Environmental Management” at ZEW Mannheim, explains how greenhouse gas emissions can be reduced in our market-based system and outlines several scenarios for future climate policy.

ZEW Mannheim is pleased to announce the eight edition of the Annual MannheimTaxation Conference on 9 and 10 September 2021. The two-day virtual conference is organised by the Leibniz ScienceCampus MannheimTaxation, a joint initiative of ZEW and the University of Mannheim. This year’s keynote speakers are Florian Scheuer, UBS Professor of Economics of Institutions at the University of Zurich, and Wolfgang Schön, Director at the Max Planck Institute for Tax Law and Public Finance in Munich.
 
We invite submissions on any topics broadly related to tax research, including papers from economics, accounting, law, political science, and interdisciplinary contributions. The conference focuses particularly on business taxation, tax avoidance and evasion, behavioural responses to taxation, tax harmonization in the European Union, political economy of taxation, international taxation, and tax law. Please submit full papers or extended abstracts via the conference management system no later than 15 July 2021.

Shaping structural change poses a myriad of challenges for the industrial landscape and is the central topic at this year’s Day of German Industry (21 to 23 June 2021). ZEW President Professor Achim Wambach commented on this matter.

Support is growing for the introduction of a global minimum tax on corporate profits. This was clearly demonstrated at the recent meeting of the G7 finance ministers. The Federation of German Industries (BDI) took this as an opportunity to organise a panel discussion on “Global Minimum Tax – Consequences for the German Economy” on 18 June 2021, including Christopher Ludwig, a member of the team of tax experts led by Professor Christoph Spengel at ZEW Mannheim and the University of Mannheim. In recent months, the tax experts have closely examined and evaluated the OECD’s reform proposals. Spengel, who worked on a BDI paper on this topic, comments on the global minimum tax.

The digital transformation continues to be a much-discussed topic that occupies business, politics and society. But how well are the federal states managing to keep up with this rapid development? An evaluation of the digitalisation level in Baden-Württemberg shows that the state has made great progress since the adoption of its digitalisation strategy “digital@bw” in 2017. The COVID-19 pandemic has accelerated this transformation considerably, but at the same time it has also revealed existing shortcomings. This is the result of a meta-study conducted by ZEW Mannheim on behalf of the state of Baden-Württemberg.

Against the background of rising inflation expectations and low interest rates, financial market experts have assessed the attractiveness of various asset classes for the next six months: While investments in stocks, commodities and real estate are currently considered attractive, the outlook for cryptocurrencies and conventional government bonds is clearly negative. Inflation-indexed bonds and green bonds are rated slightly positively by the financial analysts. This is the result of a question included in the ZEW Financial Market Survey, which was conducted among around 160 financial market experts in June 2021.

Given a shortage of skilled labour, cities are increasingly vying for qualified workers. A higher quality of life is often said to give cities an advantage in this battle for talent. In fact, the amenities a city offers in terms of family friendliness, infrastructure, cultural offerings and regional economic dynamics play a major role in employees’ decision to move to a particular city. A study by ZEW Mannheim comes to the conclusion that high- and low-skilled workers prefer very similar cities. The lower share of low-skilled workers in attractive urban areas thus mainly reflects the fact that low-wage earners are less able to afford to move to attractive cities due to the high cost of living.

On 10 June, the German Bundestag discussed an amendment to the Federal Climate Change Act. The amendment had become necessary after a ruling by the Federal Constitutional Court. Professor Sebastian Rausch, head of the Research Department “Environmental and Resource Economics, Environmental Management” at ZEW Mannheim, comments on this matter.

The ZEW Indicator of Economic Sentiment for Germany decreased in the current June 2021 survey, falling 4.6 points to a new reading of 79.8 points. By contrast, the assessment of the economic situation in Germany improved very significantly, with the corresponding indicator currently standing at minus 9.1 points, 31.0 points higher than in the previous month. The assessment of the economic situation in Germany is now back to the pre-pandemic level of August 2019. Due to the very high economic expectations, the outlook is now much more positive than in summer 2019.

At their meeting in London, the finance leaders from the Group of 7 countries agreed on backing the creation of a global minimum tax rate of at least 15 per cent for large companies. In addition, the agreement envisages forcing the largest and most profitable companies to pay taxes on part of their turnover to countries based on where they sell their services and goods. Until now, multinational companies have been able to shift profits and thus avoid taxation in countries with higher tax rates. Professor Christoph Spengel, tax expert at ZEW Mannheim and the University of Mannheim, comments on these plans.

Exactly 70 years ago, the model of parity codetermination was introduced in Germany. On 7 June 1951, the Coal and Steel Codetermination Act came into force and ensured that female and male workers had a say in major company decisions on supervisory boards. For a long time, women were hardly represented on these boards. With the establishment of a fixed gender quota in 2015, their share in leadership positions in the companies covered by this law was increased to more than one third.

The mental health risks of COVID-19 and the pandemic-related measures have been a constant topic of public discussion, also in the Netherlands. There, mental health – measured on a scale of 0 to 100 (100 equals perfect health) – declined sharply among employees in the first lockdown, but recovered relatively quickly to levels similar to those before the coronavirus pandemic. The largest decrease in mental health was observed in March 2020, when the first lockdown was imposed. Based on data from the Dutch LISS Panel, a study by researchers from ZEW Mannheim and the universities of Mannheim, Bonn and Tilburg investigates which factors played a particularly important role in increasing mental stress during the pandemic and to what extent these factors changed over time.

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

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

Stephen Comello, Julia Reichelstein, and Stefan Reichelstein
Corporate Carbon Reduction Pledges: An Effective Tool to Mitigate Climate Change?

Daniel Erdsiek
Working From Home During COVID-19 and Beyond: Survey Evidence From Employers

Annika Havlik, Friedrich Heinemann, Samuel Helbig, and Justus Nover
Dispelling the Shadow of Fiscal Dominance? Fiscal and Monetary Announcement Effects for Euro Area Sovereign Spreads in the Corona Pandemic

Milad Abbasiharofteh, Jan Kinne, and Miriam Krüger
The Strength of Weak and Strong Ties in Bridging Geographic and Cognitive Distances

Jan Abrell and Mirjam Kosch
The Impact of Carbon Prices on Renewable Energy Support

Katarzyna Bilicka, Elisa Casi-Eberhard, Carol Seregni, and Barbara Stage
Qualitative Information Disclosure: Is Mandating Additional Tax Information Disclosure Always Useful?

Guido Neidhöfer, Nora Lustig, and Mariano Tommasi
Intergenerational Transmission of Lockdown Consequences: Prognosis of the Longer-Run Persistence of COVID-19 in Latin America

Melanie Arntz, Eduard Brüll, and Cäcilia Lipowski
Do Preferences for Urban Amenities Really Differ by Skill?

Bettina Siflinger, Michaela Paffenholz, Sebastian Seitz, Moritz Mendel, and Hans-Martin von Gaudecker
The COViD-19 Pandemic and Mental Health: Disentangling Crucial Channels

Karl-Martin Ehrhart, Marion Ott, and Runxi Wang
Justification and Specification of Maximum and Minimum Balancing Energy Prices

Sebastian Siegloch, Martin Ungerer, and Frederick Zadow
Regionale Ungleichheit in Deutschland: Handlungsbedarf bei öffentlichen Dienstleistungen (Regional Inequality in Germany: Need for Action in Public Services)

Raphaela Andres, Janna Axenbeck, Irene Bertschek, Patrick Breithaupt, Rebecca Janßen, Emanuel Kollmann, Thomas Niebel, Simon Reif, Mareike Seifried, Julia Bartel, Theresa Geyer, Bruno Goes, Sandra Gottschalk, Sebastian Klump, Manuel Lauer, Paul Peters, Christian Rammer, and Bettina Schuck
Metastudie – Chancen und Herausforderungen der Digitalisierung in Baden-Württemberg (Meta-Study – Opportunities and Challenges of Digitalisation in Baden-Württemberg)

Economic Impact of Family Firms in Europe

Entrepreneurship in Rural Areas: Incidence, Determinants and Regional Economic Effects

Firm Dynamics in the Knowledge Economy – Indicator Study 2022

Taming Tech Giants’ Algorithms: What Do Consumers Know (and Want)? An Analysis of the Amazon Buy-Box Case

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: Audinga Baltrunaite (Economics and Law Division, Bank of Italy, Rome, Italy)
Location of the event: Online

Speaker: Yan Chen (University of Michigan, Ann Arbor, USA)
Location of the event: Online

Speaker: Tim DeStefano (Harvard Business School, Boston, USA)
Location of the event: Online

Speaker: Ludger Schuknecht (Lee Kuan Yew School of Public Policy in Singapore)
Location of the event: Online

Speaker: Michael Keen (International Monetary Fund (IMF)) and Prof. Joel Slemrod, PhD (University of Michigan, USA)

Picture Credits: news article of 29.06.2021: PantherMediapressmaste, news article of 24.06.2021: JLL and ZEW, news article of 21.06.2021: Anna Logue Fotografie/ZEW, press release of 21.06.2021: Anna Logue Fotografie/ZEW, press release of 17.06.2021: iStock.com/metamorworks, press release of 09.06.2021: Anna Logue Fotografie/ZEW, press release of 07.06.2021: Anna Logue Fotografie/ZEW
All further pictures: ©ZEW