News and Press Releases of DIW Berlin http://www.diw.de/en/diw_02.c.288763.en News and Press Releases en http://diw.de/sixcms/media.php/37/diw_logo_farbe_mini.jpg DIW Berlin http://diw.de/ 2016 Heat Monitor: "Second rent" lower despite higher heating energy consumption http://www.diw.de/sixcms/detail.php?id=diw_01.c.564980.en Residential heating is responsible for one-fifth of Germany’s energy consumption. Heating costs were around 562 euros per year for an average apartment in 2016, which is more than a 13th month’s rent minus heating costs (Kaltmiete). These are the findings of the 2016 Heat Monitor, published by the German Institute for Economic Research and ista Deutschland GmbH. The report presents evaluations based on an extensive database of heating bills for apartment buildings in Germany. Apartment buildings constitute almost one-half of the total housing stock in Germany. Adjusted for climate and weather, their heating energy consumption rose by around two percent in comparison to 2015. However, a further drop in energy prices provided relief to private households once again. Throughout Germany energy prices decreased by around six percent compared to 2015. But this trend will not continue: energy prices are expected to remain constant or to rise slightly in upcoming heating periods. In the light
of these developments and alongside climate policy considerations, it would be shortsighted to reduce effort in retrofitting buildings. After all, energy costs are the major determinant of the “second rent.”

The full report by Claus Michelsen and Nolan Ritter: DIW Economic Bulletin 37 (2017)


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Wed, 20 Sep 2017 04:00:00 +0200 http://www.diw.de/sixcms/detail.php?id=diw_01.c.564980.en
Gender parity in German politics: further effort required http://www.diw.de/sixcms/detail.php?id=diw_01.c.564619.en Although many political authorities endorse the basic goal of parity between men and women across the board, reality does not yet reflect this in Germany. In the German Bundestag, for example, at present 37.1 percent of representatives are women. Divided among the six parties with the greatest likelihood of being elected to the Bundestag, a total of 1,979 people are running for office in the upcoming election. Of these, 35.7 percent are women. An analysis of the lists of candidates by party shows that the parties currently represented in the Bundestag have significantly higher proportions of women among their candidates than the opposition parties FDP and AfD do. In the top 48 slots—that is, the first three on each of the 16 state lists—the Green Party is putting forward 32 women, the Left Party 27, and the SPD 25. With 15 female candidates for office, the Union Parties (CDU/CSU) are also higher than the FDP and AfD (with 11 and eight candidates respectively). Of the 263 ministerial posts available since Germany was founded, women have only held 43. Although Germany has a female chancellor and the gender distribution in the current cabinet is almost equal, certain ministerial posts have yet to be held by a woman. The government resulting from the upcoming Bundestag election could serve as an example by explicitly committing itself to gender parity. In state parliaments, women are more underrepresented than on the national level. In the former, the proportion of women is 31 percent and has recently fallen. Only three out of 16 regional governments are headed by a woman. An international comparison shows that extended use of voluntary quotas for the parties—as already practiced in Germany—could be a highly viable way of achieving parity. They would be more effective if consistently implemented by all at all levels. And voters can make a difference by demanding equal representation from the parties.

The full report by Daniela Arregui Coka, Ronny Freier and Johanna Mollerstrom: DIW Economic Bulletin 37 (2017)


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Wed, 13 Sep 2017 04:30:00 +0200 http://www.diw.de/sixcms/detail.php?id=diw_01.c.564619.en
DIW Economic Outlook: German economy continues steady upswing with no sign of overheating http://www.diw.de/sixcms/detail.php?id=diw_01.c.564110.en The German economy’s upswing is holding steady. The fine state of the world economy and robust domestic economic development are driving Germany’s GDP growth. After an unexpectedly strong first half of 2017, the German Institute for Economic Research (DIW Berlin) forecasts 1.9 percent growth for Germany’s GDP this year and next. In June, DIW Berlin anticipated 1.5 percent growth for 2017 and 1.7 percent for 2018. In 2019, the German economy is likely to lose a bit of steam and only grow by 1.6 percent.

The country’s production capacity will still be well utilized at that growth rate. The past five years have seen the output gap more or less closed, that is, actual output has been approximately equal to potential output. In the course of the stable upswing, the economy will be producing in the upper range of normal capacity utilization during the forecast horizon.

An overheating of the German economy is not to be expected for the forecast horizon, however. Other than fluctuations due to energy prices, the inflation rate should rise only gradually and will not permanently climb past the two-percent mark until 2019. That is: Strong economic growth will not endanger price stability in Germany. An overheating economy, i.e. an overutilization of capacities in combination with strongly increasing prices, is out of sight.

However, there are signs of bottlenecks – primarily in the job market. Employment will surge, by roughly 640 000 persons in 2017 and 370 000 persons in 2018; 2019 will see another increase by 250 000 persons. Therefore, unemployment will decrease further, despite the unemployment rate (ILO standard) only falling slightly below its current value, to 3.6 percent in 2019. Instead, migration is fueling the rising number of persons in employment; the domestic population is decreasing. Though the number of women and older people participating in the labor market is rising, they are too few to cover the increasing demand for labor.

In this environment, wages should also gain momentum during the forecast horizon. However, when measured against the booming job market, wage increases will be moderate. This is partly due to the fact that some unions have priorities above and beyond tariff hikes – such as early retirement and flexible working hours. Owing primarily to rising energy prices, the inflation rate will probably be significantly higher than it has been in the recent past. In turn, employees’ purchasing power should also experience only mild growth. Instead, companies are likely to continue to make substantial profits – the bottom line is that, during the forecast horizon, the wage ratio will decline.

In individual sectors of the economy only, such as the construction industry, high capacity utilization is likely to lead to sharply rising prices. Because of a lack of serious competition from abroad construction companies will have more room to drive prices upward than those in other sectors. However, this should not hamper the strong growth forecast for investment in construction. The environment for financing real estate should remain favorable due to low interest rates.

The European Central Bank is expected to be steering its policy in a somewhat less expansionary direction during the next few quarters, which will cause interest rates to gradually rise as well. The recently robust euro area economy appears to be poised for broad-based growth. In all member states of the currency union, economic growth is on an upswing, and even countries of concern such as Italy and Portugal are following an upward trend.

Many member states continue to have very high unemployment rates, so a sharp rise in wages and inflation is hardly to be expected. However, prices will gradually rise in the currency union anyway. For this reason, the European Central Bank should start preparing the markets for a normalization of its monetary policy, and it should do it now. It would be well advised to kick off such an effort by reducing bond purchase programs as of the beginning of 2018; this forecast also assumes an initial interest rate increase at the beginning of 2019. Other central banks are also expected to tighten their monetary policy during the forecast horizon.

This will, to some extent, slow down the world economy’s currently strong pace of growth and cause German exports, which have recently risen, to lose some momentum during the forecast horizon. And in the short term, the economy will reflect the appreciation of the euro perceptible since the first half of 2017, leading to a rise in the price of German products in markets outside of Europe. This will not make much of a dent in the excessively high current account surplus forecast for the period until 2019, however. The surplus should remain at a level of around eight percent in relation to GDP, considerably higher than the threshold value of six percent the European Union set as part of its Macroeconomic Imbalance Procedure.

The capital drain that comes with high current account surplus indicates that German firms still find it more appealing to invest abroad than in Germany. This is supported by the fact that, although the German economy is experiencing an upswing, firms are only cautiously investing in new machinery and equipment. That is, however, also due to the upswing being mostly based on sectors of the economy, which tend to produce less capital-intensive. In the short run, the weakness of investment contributes to the expectation that the economy does not, as in earlier upswings, gain additional momentum and runs into an overheating. In the medium run, the investment weakness will adversely affect the growth of the country’s capital stock and with it, the German economy’s potential output.

The impending demographic shift is an unfavorable factor that will put an additional damper on potential output. Policy makers must therefore make the general conditions for investment in Germany more attractive. This can happen via targeted public investment spending (e.g., on education or infrastructure). The fiscal room for maneuver to do so exists to a limited extent. However, it is not large enough to accommodate the drastic tax cuts invoked in the heat of the current Bundestag election campaign. A large portion of the surplus in the public budget is due to the economic upswing, making it ephemeral and a poor basis for long-term planning. We can only hope that after the Bundestag election policy makers set the right priorities.

In that sense, the present forecast’s accuracy depends on the results of the election. For example, the direction fiscal policy takes with regard to setting priorities for short-term and long-term measures depends to a great extent on which parties have the majority in the new Bundestag. The outcome of the election is thus indispensable when determining Germany’s economic outlook. The present forecast is based on the status quo of fiscal policy. It only considers fiscal policy measures that are already part of the legislative process. Given this situation, this forecast must be read with due caution.

The external trading environment also poses uncertainty for economic development in Germany. The course that economic policy will take in the US is virtually impossible to forecast; the government seems to have lost its assertiveness, and central elements of the government’s projects are proving impossible to implement. The extent to which the economic policy measures announced – such as tax cuts, investment programs, and reneging on trade agreements – will be implemented in reality remains to be seen. For the present forecast, the authors assume that there will be no measures with a significant effect on the economy in the coming years.

Finally, the economic situation in the euro area continues to pose risks for the German economy. There has recently been an upswing, but the banks in many countries, in particular Italy, are still encumbered by non-performing loans. A faster rise in the interest rate as a consequence of tightening monetary policy could push those banks to the breaking point and rekindle the financial crisis in the euro area – with possibly substantial consequences for the economy.

Links

DIW Economic Outlook in: DIW Wochenbericht 36/2017 (in German)

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Fri, 08 Sep 2017 03:46:00 +0200 http://www.diw.de/sixcms/detail.php?id=diw_01.c.564110.en
The world economy and the euro area: broad-based upswing http://www.diw.de/sixcms/detail.php?id=diw_01.c.564237.en This year and next, global GDP will grow more strongly than expected. The growth rate should be just under four percent. In developed economies, the continuing improvement in the job market situation will drive consumption. Corporate investment activity will also gain momentum. Over the forecast horizon, a slowly rising inflation rate and somewhat tighter monetary policy will gradually slow private consumption down. Emerging countries are able to maintain somewhat more robust growth. Production is expanding again in China. In Brazil and Russia, stabilizing prices of raw materials and decreasing inflation rates are supporting economic momentum. Uncertainty about the US government’s economic policy and the geopolitical conflict involving North Korea are current risks for the world economy.

The full report by Ferdinand Fichtner, Guido Baldi, Christian Dreger, Hella Engerer, Stefan Gebauer, and Malte Rieth: DIW Economic Bulletin 36 (2017)


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Fri, 08 Sep 2017 03:38:00 +0200 http://www.diw.de/sixcms/detail.php?id=diw_01.c.564237.en
German economy still running at high capacity http://www.diw.de/sixcms/detail.php?id=diw_01.c.564239.en The German economy is on track for continued growth. Due to the unexpectedly robust first six months of 2017, the German Institute for Economic Research is raising its forecast for GDP growth to 1.9 percent for the current year. This year and arguably for the coming two years, the country’s output will exceed potential output; nonetheless, there is no risk of overheating. Economic growth will slow down somewhat, not only because demand from abroad will be expanding at a slower rate. Additionally, both private consumer and public spending will experience only moderate increases, while companies will continue their reluctance to invest in new machines and facilities. Inflation should rise only slightly, even givenmodest wage increases, which further reflects the continued growth of the potential labor pool. The economy is also beset with numerous risks. For example, exports could be adversely affected if the external value of the euro were to rise - for instance as a result of a more restrictive monetary policy than assumed here. And it is entirely possible that increasing protectionism could hinder world trade.

The full report by Ferdinand Fichtner, Karl Brenke, Marius Clemens, Simon Junker, Claus Michelsen, and Thore Schlaak: DIW Economic Bulletin 36 (2017)


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Fri, 08 Sep 2017 03:30:00 +0200 http://www.diw.de/sixcms/detail.php?id=diw_01.c.564239.en
Tim Kaiser has been appointed at the University Koblenz-Landau http://www.diw.de/sixcms/detail.php?id=diw_01.c.564102.en Tim Kaiser has been appointed for the W1-Junior professorship with tenure-track-option for economics and business didactics at the University Koblenz-Landau. The department international economics warmly congratulates him!

webpage of  Tim Kaiser


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Thu, 07 Sep 2017 01:17:00 +0200 http://www.diw.de/sixcms/detail.php?id=diw_01.c.564102.en
Increased labor market participation can’t do the job of mastering Germany’s demographic change in the future http://www.diw.de/sixcms/detail.php?id=diw_01.c.563934.en In the last decade the available labor force has expanded in Germany—despite the decline in the working-age population. The reason: labor market participation has increased, for women in particular and older people in general. Also noticeable was a rise in qualification level because well-educated people have a particularly high propensity to participate in the labor market. Most recently, Germany’s potential labor force has grown as a consequence of many factors, including migration—from other EU member states in particular. The immigrants from EU countries now exhibits higher labor market participation than that of Germans. This is due to the favorable age structure of the migrants from the EU. The situation is different overall for migrants from non-member states: their participation is relatively low. This may have to do with lack of access to the job market. However, another factor is that the participation of women from non-member states is far below the average. In the future, Germany will be more or less reliant on migration. This is the finding of various model calculations showing the effects of demographic influences and participation behavior on Germany’s future labor supply. Even if Germany’s level of labor market participation rises to Switzerland’s current level by 2040, the finding still applies. The Swiss example shows that policy makers were successful at attracting persons with higher labor market participation from abroad. In Switzerland, the labor market participation of older people is also much higher than in Germany. Policy makers in Germany should take that into account and ensure that skill potential is not prematurely lost to early retirement. Granting tax and social contribution privileges to the semiretired is counterproductive. [...]

The full report by Karl Brenke and Marius Clemens: DIW Economic Bulletin 33/34/35 (2017)


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Mon, 04 Sep 2017 05:01:00 +0200 http://www.diw.de/sixcms/detail.php?id=diw_01.c.563934.en
Income, social support networks, life satisfaction: lesbians, gays, and bisexuals in Germany http://www.diw.de/sixcms/detail.php?id=diw_01.c.563936.en Towards the very end of this legislative period, a cross-caucus parliamentary majority gave same-sex marriage the green light – progress for the legal equality of homosexuals in Germany. This report focuses on the life situations of homosexual and bisexual people in Germany. The careers they pursue, for example, differ from those of heterosexuals. Hourly wages are an area of significant disparity: homosexual and bisexual men earn less per hour than heterosexual men with the same qualifications in comparable professions. While differences in personality structure are virtually nonexistent, homosexuals and bisexuals describe themselves as less satisfied with their lives and under more psychological stress. An analysis based on the data from the Socio-Economic Panel (SOEP) at the German Institute for Economic Research yielded these and other results. The SOEP is one of the few representative population surveys in Germany that collects information on the sexual orientation of participants. Expanding the scope of regular social reporting to include data on sexual orientation would make it possible to better document differences in life situations and to more effectively identify where action is needed – such as in fighting discrimination. [...]

The full report by Martin Kroh, Simon Kühne, Christian Kipp, and David Richter: DIW Economic Bulletin 33/34/35 (2017)


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Mon, 04 Sep 2017 05:00:00 +0200 http://www.diw.de/sixcms/detail.php?id=diw_01.c.563936.en
Anna Lu has successfully defended her dissertation http://www.diw.de/sixcms/detail.php?id=diw_01.c.563641.en Anna Lu, who worked at the Firms and Markets department, has successfully defended her dissertation at the Heinrich Heine University Düsseldorf.

The dissertation with the title "Three Essays on Empirical Industrial Organization in Grocery Retailing" was supervised by Prof. Dr. Tomaso Duso (DIW Berlin, Heinrich Heine University Düsseldorf) and Prof. Dr. Justus Haucap (Heinrich Heine University Düsseldorf).

We congratulate Anna on her success and wish her all the best for her future career.


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Mon, 28 Aug 2017 01:05:00 +0200 http://www.diw.de/sixcms/detail.php?id=diw_01.c.563641.en
Why a Franco-German bargain will help secure the euro http://www.diw.de/sixcms/detail.php?id=diw_01.c.563284.en The op-ed by Marcel Fratzscher was first published on FT.com on August 9, 2017.

The gains would outweigh the costs and help chart a path for the continent’s future

As Germany heads towards its general election one of the debates in Berlin and elsewhere is what course the next government will pursue on Europe. In particular there is much speculation about a possible “grand bargain” between France and Germany that would see Berlin re-engage in reforming Europe.

At the centre of such a bargain could be a macroeconomic stabilisation mechanism for the euro area that balances the demand for stricter rules and more solidarity. Call it a “European Monetary Fund”, or EMF.

In a recent analysis the European Commission said that such a mechanism was necessary for dealing with economic crises and for supporting further integration. This is music to the ears of the French government and all those who want more solidarity and abhor austerity. But the commission is equally right that a functioning monetary union requires credible rules, and does not need either a transfer union or a political union. This pleases the German side, which fears moral hazard and suspects behind almost every reform proposal an attempt to get at its money.

Transforming the European Stability Mechanism, the eurozone’s bailout fund, into an EMF could constitute the “grand bargain”. The EMF would have to strike a balance across three dimensions. First between crisis prevention and crisis resolution — the EMF should have a common budget derived from national taxes, and a debt-issuing capacity, not only for emergency loans during crises, but also for supporting reforms and for dealing with recessions.

Potential instruments are structural adjustment programmes, a joint unemployment insurance scheme, and funds for common infrastructure, energy or digital projects. The common budget should not be seen as a substitute, but as a complement to sensible rules on national budgets. The overarching objective should be to ensure economic convergence to make the euro viable and European Central Bank monetary policy more symmetrical. This would be a gain for all member states as it will ultimately result in higher growth and less malign crises.

The EMF also needs to strike a balance between European solidarity and national sovereignty. France likes to emphasise the need for risk-sharing, while Germany stresses the importance of common rules and risk-reduction. The euro area needs both. Hence EMF instruments should be linked to strict conditionality. It could and should create an actuarially fair insurance union, while ruling out a larger transfer union.

The third balancing act is between the state and the market. In addition to completing banking union and capital market union, markets should be used as a disciplining device. Making EMF financing in crisis times conditional on private sector involvement, as well as risk-weighting and capping banks’ holdings of domestic government debt, would discipline governments to pursue sound policies in good times.

The tricky issue is governance. For its conditionality to be credible, the EMF should be a technocratic institution, similar to the IMF. Members’ votes could match their relative financial contributions, yet there should neither be unanimity nor a veto right for individual members. And it could be accountable to a euro area chamber of the European Parliament. A strong EMF would not have to weaken the EU commission, which should closely co-operate with the ESM on surveillance and on programme implementation.

Such a grand bargain would require tough compromises. But the gains would outweigh the costs for everyone. Paris would succeed in strengthening solidarity and economic convergence; Berlin would get more credible mechanisms to reduce risks and liabilities for having to bail out its neighbours. Most important of all, such a deal would help make the euro sustainable and chart a path for Europe’s future.


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Tue, 15 Aug 2017 03:12:00 +0200 http://www.diw.de/sixcms/detail.php?id=diw_01.c.563284.en
Value-added tax cuts bring greatest relief to lower and middle income households http://www.diw.de/sixcms/detail.php?id=diw_01.c.562964.en If the desire is to provide tax relief to households with lower and middle incomes in Germany, it is necessary to target the valueadded tax rather than the personal income tax. Lowering the standard value-added tax rate by one percentage point (from 19 to 18 percent) would mean relief worth 11 billion euro for consumers. The reduced value-added tax rate of seven percent should only be cut for food and local public transportation. Lowering it by two percentage points to five percent would generate relief equaling 3.8 billion euro. In total, these reform measures would generate fiscal relief of just under 15 billion euro. The simultaneous abolition of the remaining value-added tax would yield an overall revenue loss of 7.4 billion euro to the government. It could be abolished gradually in order to appropriately deal with adjustment issues or political resistance. Due to the regressive nature of the value-added tax, a major portion of the tax cuts would benefit lower and middle income groups, assuming companies pass on the relief to consumers by lower prices. [...]

The full report by Stefan Bach and Niklas Isaak: DIW Economic Bulletin 31+32 (2017)


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Wed, 02 Aug 2017 03:04:00 +0200 http://www.diw.de/sixcms/detail.php?id=diw_01.c.562964.en
"Relief for the middle class through value-added tax cuts": Six questions for Stefan Bach http://www.diw.de/sixcms/detail.php?id=diw_01.c.562899.en Mr. Bach, to what extent could cutting the value-added tax rate relieve low- and middle-income earners?

If you want to provide significant fiscal relief to lower and middle income groups, you should focus more on the valueadded tax and less on the income tax. The value-added tax puts the burden on consumption, and consumer spending accounts for a much higher proportion of lower incomes than higher incomes. High earners pay high direct taxes and social security contributions. They are also able to save a large portion of their income, so they are less affected by the value-added tax burden than low earners are. This is called a regressive tax burden and refers to current income. [...]

The interview with Stefan Bach is published in the DIW Economic Bulletin 31+32 (2017)


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Wed, 02 Aug 2017 03:02:00 +0200 http://www.diw.de/sixcms/detail.php?id=diw_01.c.562899.en
Isabel Teichmann receives Albrecht-Daniel-Thaer-Förderpreis http://www.diw.de/sixcms/detail.php?id=diw_01.c.562959.en On 5 July 2017, Isabel Teichmann (Department of Energy, Transportation, Environment; until 30 June 2017: Department of Competition and Consumers) was awarded the Albrecht-Daniel-Thaer-Förderpreis for her doctoral thesis “Three Topics in Agriculture: Private Quality Standards, Marketing Channels, and Biochar.” The prize is endowed annually by the Förderverein für Agrar- und Gartenbauwissenschaften an der Humboldt-Universität zu Berlin e. V. Ms Teichmann’s doctoral thesis was supervised by Prof. Dr. Dr. h.c. Harald von Witzke (Humboldt University Berlin) and reviewed by Prof. Dr. Pio Baake (Department of Competition and Consumers) as well as Stéphane Caprice, Ph.D., HDR (Toulouse School of Economics).


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Wed, 02 Aug 2017 11:12:00 +0200 http://www.diw.de/sixcms/detail.php?id=diw_01.c.562959.en
Changes in common ownership of German companies http://www.diw.de/sixcms/detail.php?id=diw_01.c.562474.en Ownership of publicly listed German companies has undergone significant changes in recent years. The aim of this report is to document these trends since 2007 and analyze the extent to which firms that compete in the same product market are owned by the same investors, which is known as common ownership. We show that some large foreign institutional investors have overtaken domestic investors and now occupy the top spots. This is true both in terms of value and the number of blockholdings, i.e. large blocks of shares. In addition, there has been an increase in ownership concentration overall. That said, private and governmental investors with few but large holdings, still own more than half of German equity. Using two leading industries, the chemical and car industries, we show that ownership trends and levels of common ownership can be very different across industries. While it is unclear a priori what common ownership implies for competition, innovation, and consumer welfare, markets that show more common ownership, such as the chemical sector, deserve more attention from policy makers, regulators, and academics alike.

The full report by Jo Seldeslachts, Melissa Newham, and Albert Banal-Estanolin: DIW Economic Bulletin 30 (2017)


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Wed, 26 Jul 2017 09:00:00 +0200 http://www.diw.de/sixcms/detail.php?id=diw_01.c.562474.en
"The concentration in the investor market has intensified": Eight questions for Jo Seldeslachts http://www.diw.de/sixcms/detail.php?id=diw_01.c.562477.en Mr Seldeslachts, could you please explain the term "common ownership"?

Common ownership means that one investor has shares in several companies at the same time. If you want to be even more precise it would be the same owner or investor having shares in several companies that compete in the same market. [...]

The interview with Jo Seldeslachts is published in the DIW Economic Bulletin 30 (2017)


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Wed, 26 Jul 2017 08:59:00 +0200 http://www.diw.de/sixcms/detail.php?id=diw_01.c.562477.en
Friederike Lenel has successfully defended her dissertation http://www.diw.de/sixcms/detail.php?id=diw_01.c.562375.en Friederike Lenel, who worked at the Development and Security department, has successfully defended her dissertation at the Humboldt University Berlin.

The dissertation with the title "Informal Support and Insurance - The interplay between inter-household support arrangements and access to alternative risk management resources" was supervised by Prof. Georg Weizsäcker, Ph.D. (DIW Berlin, Humboldt University Berlin) and Prof. Dr. Susan Steiner (Leibniz Universität Hannover).

We congratulate Friederike on her success and wish her all the best for her future career.


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Mon, 24 Jul 2017 10:53:00 +0200 http://www.diw.de/sixcms/detail.php?id=diw_01.c.562375.en
Kathleen Ngangoué has successfully defended her dissertation http://www.diw.de/sixcms/detail.php?id=diw_01.c.562302.en Kathleen Ngangoue, who works at the Competition and Consumers department, has successfully defended her dissertation at the Humboldt University Berlin.

The dissertation with the title "Decision-Making in Markets" was supervised by Prof. Georg Weizsäcker, Ph.D. (DIW Berlin, Humboldt University Berlin) and Prof. Antonio Guarino, Ph.D. (University College London).

We congratulate Kathleen on her success and wish her all the best for her future career.


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Fri, 21 Jul 2017 10:29:00 +0200 http://www.diw.de/sixcms/detail.php?id=diw_01.c.562302.en
Income groups and types of employment in Germany since 1995 http://www.diw.de/sixcms/detail.php?id=diw_01.c.561915.en This report examines how income groups and forms of employment in Germany have changed in the past two decades. Since the mid-1990s, inequality in disposable household income in Germany has generally increased. This trend was in effect until 2005. While fewer people had disposable incomes in the median range, the proportion of the population at both tails of the income distribution increased. At the same time, there were many changes in the labor market. Employment rose, working hours became increasingly differentiated, and starting in 2005, the unemployment rate fell. While the employment increase was spread across almost all income groups, it was reflected differently in each group. The proportion of people with low wages in the income groups below the median rose steadily during the two decades studied. At the same time, in 2014–15 more people in high income groups had regular types of employment than they did in the second half of the 1990s. In the groups in the median range, regular types of employment were recently as frequent as they were 20 years ago and unemployment also declined here. Further, in these groups the proportion of those with jobs paying low wages is higher.

The full report by Peter Krause, Christian Franz, and Marcel Fratzscher in: DIW Economic Bulletin 27 (2017)


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Fri, 14 Jul 2017 03:35:00 +0200 http://www.diw.de/sixcms/detail.php?id=diw_01.c.561915.en
"Regular employment continues to play important role": Five questions for Peter Krause and Christian Franz http://www.diw.de/sixcms/detail.php?id=diw_01.c.561001.en Mr. Krause, you took a close look at income groups in Germany. What did you hope to accomplish?

Peter Krause: We wanted to bring together two discussion threads in our study. One thread has to do with the long-term trend in inequality of household income distribution and the other, with changes in labor force participation. Until the mid-2000s, inequality in disposable household income increased and has plateaued on the same high level ever since. At the same time, labor force participation has risen rapidly: many more people have jobs now than 20 years ago. The question here is: how have employment types changed in the respective income groups? [...]

The interview with Peter Krause and Christian Franz is published in the DIW Economic Bulletin 27 (2017)


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Fri, 14 Jul 2017 03:30:00 +0200 http://www.diw.de/sixcms/detail.php?id=diw_01.c.561001.en
Risk weighting for government bonds: challenge for Italian banks http://www.diw.de/sixcms/detail.php?id=diw_01.c.561637.en Although banks are required to document their equity capital for loans, corporate bonds, and other receivables, they are currently exempted from the procedure when investing in government bonds: they enjoy an “equity capital privilege.” As part of the Basel III regulatory framework redraft, the privilege may be eliminated in order to disentangle the default risks between sovereigns and banks. The present study examines how much additional equity capital the banks of the euro area’s major nations would require if the equity capital privilege were eliminated. At nine billion euros, the estimates show the highest capital requirement for Italian banks. In comparison, French banks would only require additional capital of three billion euros and German banks would need just under two billion euros. Since eliminating the equity capital privilege would make the Italian state’s consolidation efforts more difficult, it is advisable to risk weight newly purchased government bonds only or allow for long transition phases.

The full report by Dominik Meyland and Dorothea Schäfer in: DIW Economic Bulletin 28/29 (2017)


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Wed, 12 Jul 2017 05:04:00 +0200 http://www.diw.de/sixcms/detail.php?id=diw_01.c.561637.en