News and Press Releases of DIW Berlin News and Press Releases en DIW Berlin Gross income gap has increased since reunification The top 10% of income earners in Germany earn almost as much as the middle 40% – the top 1%’s share of national income has increased from eight to 13 percent since 1995.

The share of national income belonging to the top 1% of income earners has grown significantly in Germany since the mid-1990s, while the share earned by the bottom 50% has significantly decreased. These are the main findings of a study by DIW Berlin economist Charlotte Bartels based on income tax data for Germany for the World Inequality Report.

Tue, 16 Jan 2018 10:00:00 +0200
Construction volume forecast: End of the new housing sector boom Construction industry continues very positive development – more room for modernization and renovation of existing buildings – construction prices rise sharply

The construction sector cycle will continue its upward course in the next two years according to the forecast of the German Institute for Economic Research (DIW Berlin), which makes its annual prognosis of construction volume on behalf of the Federal Ministry for the Environment (Bundesbauministerium, BMUB) and the Federal Institute for Research on Building, Urban Affairs and Spatial Development (Bundesinstitut für Bau-, Stadt- und Raumforschung, BBSR). However, investment will concentrate more on renovation and modernization, swinging away from new construction. Commercial and public-sector construction activity is expected to continue its moderate pace of increase.

The price of construction services will rise sharply as overall capacity utilization in this sector is close to maximum. Accordingly, cost increases in wages, energy, raw materials, and property should have a major impact. The nominal rate of increase in the construction volume to 392 billion euros in 2018 and 414 billion euros in 2019 will therefore translate into significantly weaker real rates of increase. They should be 1.8 percent in 2018 and 2.4 percent in 2019. With real rates of increase of 3.5 percent this year and a further three percent in 2019, the housing construction sector should further serve as the foundation of Germany’s growth. Public construction will have negative growth (-1.6 percent) this year and with a level of 0.6 percent, recover only slightly in 2019. Commercial construction will grow slightly in 2018 (0.2 percent), but at two percent in 2019 it should make a visible contribution to growth in the sector.

Fri, 12 Jan 2018 12:00:00 +0200
Gert G. Wagner celebrates his 65th birthday, leaves position on DIW Berlin's executive board Gert G. Wagner, who served as a member of the German Institute for Economic Research's executive board from 2011 to 2017, will celebrate his 65th birthday on January 5. The economist and social scientist was the head of the Socio-Economic Panel (SOEP) research infrastructure at DIW Berlin from 1989 to 2011 and developed it into the largest and longest-running long-term study on social and economic conditions in Germany. Wagner is leaving his position as a member of DIW Berlin's executive board in January but will remain at the institute as a Visiting Senior Research Fellow. He will shift the focus of his future research activities to the Max Planck Institute for Human Development (Max-Planck-Institut für Bildungsforschung), where he has been a Max Planck Fellow since 2008.

"Gert G. Wagner has been of great service to the SOEP and DIW Berlin," said Axel A. Weber, chairman of DIW Berlin's board of trustees. "Together with an outstanding staff, he made the SOEP into the excellent and world-renowned research infrastructure it is today. As a member of DIW Berlin's executive board, he was just as successful in taking on a large amount of responsibility for the entire institute."

Wagner stepped down from leading the SOEP in early 2011 to join DIW Berlin's executive board. Together with Cornelius Richter and Georg Weizsäcker, Wagner successfully led the institute through its evaluation by the Leibniz Association (Leibniz Gemeinschaft) as the chairman of the executive board ("president"). After Marcel Fratzscher took over the position of president in February 2013, Wagner became a member of DIW Berlin's executive board. Stefan Liebig, who was named director of the SOEP, took over Wagner's position on the executive board effective January 1, 2018.

Thu, 04 Jan 2018 09:30:00 +0200
On this holiday season ... DIW Berlin wishes you a happy festive season and a peaceful and prosperous new year in 2018!

Fri, 22 Dec 2017 10:40:00 +0200
DIW Berlin Economic Barometer December 2017: the boom continues despite an end-of-the-year damper The Economic Barometer of the German Institute for Economic Research (DIW Berlin) dropped by four points in December to 109 points. However, the value above 100 still indicates above-average GDP growth in the fourth quarter by slightly more than half a percent when compared to the third quarter. "Economic growth in the final quarter will be somewhat weaker than before. Nonetheless, the bulging order books indicate that the strong upswing will continue," says Ferdinand Fichtner, DIW Berlin's chief economic forecaster.

Thu, 21 Dec 2017 10:25:00 +0200
New studies from DIW Berlin emphasize the importance of day care facilities quality for children's development Children from families who do not speak German as their main language at home often attend childcare facilities with children in similar situations – Policies providing financial incentives for facilities with a minimum percentage of children from migrant backgrounds shouldn’t be encouraged – Separate study shows that quality is strongly influenced by children's social behavior – The effect is strongest for children from socioeconomically disadvantaged families

More and more children in Germany are attending day care centers. In 2016, almost 33 percent of children under the age of three and around 94 percent of all children aged three to six were attending a day care center. The quality of a center and composition of groups there play an important role in children's behavioral and linguistic development. However, a new study from the German Institute for Economic Research (DIW Berlin) shows that children whose home language isn't German often attend a day care center with peers who also do not speak German with their families at home.

Wed, 20 Dec 2017 12:23:00 +0200
IAB-BAMF-SOEP Survey of Refugees in Germany: Revision of the Dataset The Institute of Employment Research (IAB), the Information Centre for Asylum and Migration of the Federal Office for Migration and Refugees (BAMF-FZ), and the Socio-Economic Panel (SOEP) at the German Institute for Economic Research (DIW Berlin) are currently working together on a longitudinal survey of refugees. The survey research institute Kantar Public (formerly TNS Infratest) has been commissioned to carry out the interviews. Kantar Public performs routine checks to ensure the quality of the survey. In preparation for the next round of interviews, Kantar Public found that one interviewer had not conducted interviews according to the established procedures. Six percent of the total household interviews were affected.

To address this issue, the research institutes involved in the study asked an expert in survey research methodology who is not part of the project, Prof. Dr. Jörg-Peter Schräpler of Ruhr University Bochum, to evaluate the dataset for statistical anomalies. In cases where additional statistical anomalies were identified, the respondents were contacted again. All of these respondents confirmed that their interviews had been conducted properly. These comprehensive checks provided no indication that further irregularities had occurred in the process of conducting the survey.

Kantar Public is currently assessing its quality control procedures and will take the necessary steps to improve quality control in its fieldwork processes and organization. Users of data from the IAB-BAMF-SOEP Survey of Refugees have been informed, and a revised version of the dataset will be provided to them soon.

After rechecking the results of studies published thus far based on the survey data, we have determined that the basic conclusions of these studies still hold after the data revision. The deviations in the revised dataset are either within the margin of statistical error, or they result in only slight differences of a few percentage points compared to the previously released version of the data. Details on the revised results can be found on the IAB website (in German).

The DIW publications affected by the data revision will be replaced with corrected versions in early 2018.


Wed, 20 Dec 2017 11:45:00 +0200
Crude Oil: market trends and simulations point toward stable equilibrium In this study, we report on the current state of the international market for crude oil. The market data we analyzed indicate that competition has intensified as a result of the now firmly-established shale oil extraction industry in the U.S. Model-based simulations also show that supply-side shifts should only have moderate price effects. This applies to both an expansion in U.S. shale oil production and a disruption of production in OPEC countries. Market data and simulations indicate that the crude oil market is currently in a new equilibrium that appears to be relatively robust in the short term. In the absence of further shocks, we can continue to expect a moderate price level for crude oil in the short term with corresponding implications for economic and climate policy. [...]

The full article by Aleksandar Zaklan, Dawud Ansari and Claudia Kemfert in:

DIW Economic Bulletin 51-52/2017

Wed, 20 Dec 2017 11:00:00 +0200
Graduation Ceremony 2017 Last week, 10 new Ph.D. graduates received their certificates. In a festive ceremony with classical music, the new Ph.D.s were honored by the DIW Berlin president Prof. Marcel Fratzscher Ph.D., the Graduate Center dean Prof. Georg Weizsäcker Ph.D. and the former federal minister of education Dr. h. c. Edelgard Bulmahn who held the commencement speech.

We wish each and every one much success in their future careers!

Mon, 18 Dec 2017 02:54:00 +0200
Nils May wins the VfS Conference Subsidy Nils May, a DIW PhD candidate and Research Associate at the Climate Policy Department, has received a Subsidy from Verein für Socialpolitik (VfS). The prize was awarded for his presentation "Cost-Efficient investments? Policy Impacts on Financing Costs" at this year's  European Assocation of Environmental and Resource Economists (EAERE) Conference in Athens.

Fri, 15 Dec 2017 11:31:00 +0200
DIW Economic Outlook: German economy booming but not to the point of overheating The German economy continues to boom and the upswing has recently gained breadth. In addition to continuing strong consumer demand on the domestic front, the flourishing global economy is making itself felt in a growing Germany economy. In view of strong exports and abating global risks companies in capital-intensive manufacturing and processing industries are currently investing more. This activity is adding momentum to the upswing.

The German Institute for Economic Research (DIW Berlin) is raising its forecast compared to the fall, partly because the first half of 2017 was more robust than currently documented in the official statistics. The German economy is expected to grow by 2.2 percent this year and next. The growth rate will likely be somewhat lower again in 2019: around 1.6 percent. In September, the growth forecast for this year and next was 1.9 percent; for 2019 the forecast remains unchanged.

The German economy is booming right now. Production is running at high capacity and wages and prices should gradually begin to rise more substantially than recently discernable. But there is no sign of overheating. This year the unemployment rate was 5.7 percent, and it should drop to 5.2 percent by 2019. Despite the exceptionally favorable situation in the labor market wage hikes are only moderate right now. Cost pressure on companies and the prices of manufactured goods and services have virtually remained the same. At 1.7 percent, this year’s inflation rate is significantly higher than it was last year. This is due almost entirely to the fact that energy prices are no longer falling and hence, cost relief from this side has ceased. But even in 2019, the inflation rate is not expected to top the two-percent mark. Thus, there is no wage-price spiral typical of an overheating economy on the horizon.

The persistently high unemployment rate in many European Union member states is partially responsible for this, as migration from other EU countries feeds the increase in employment in Germany. For this reason, the employee negotiating position in collective bargaining rounds has improved only gradually. And energy prices have held down the inflation rates of past years, which probably also contributed to the moderation in wage agreements. Most of them have terms that will not expire until next year and will therefore leave their marks on the wage trend for a longer period.

In the European Union and the euro area the economy is also on an upswing, and production is rising more sharply than potential output. As a result, the euro area is approaching normal capacity utilization as measured by conventional estimation methods. However, unemployment remains high in many countries. Both private and public debt levels are declining in relation to GDP in many places, but they are still at rather high levels. And many bank balance sheets – particularly those in Italy – still harbor risks because a significant volume of loans is at risk of default.

Under these circumstances, the European Central Bank (ECB) would be well advised to tighten monetary policy in a very gradual manner only. It would be premature to commit to a long-term phaseout of unconventional monetary policy or future interest rate increases at this time because aside from fluctuations caused by energy prices, the inflation rate should remain lower than the ECB’s inflation target of below, but close to two percent during the forecast horizon. By following a rapid phaseout policy, the ECB would risk exposing the euro area economy prematurely to a significant loss of momentum. And both banks and the public budget would face risks from changing interest rates; in the worst case, rising financing costs could destabilize the financial system again.

For this forecast, we assumed cutbacks in the ECB asset purchase program as of January 2018 and the first interest rate increase in mid-2019. But even this gradual tightening of monetary policy should slow down the current strong upswing in the euro area toward the end of the forecast horizon. Other central banks will also rein in their monetary policy during the forecast horizon, slowing down the global economy’s very strong momentum at present.

Toward the end of the forecast horizon, this will also dampen German exports and its expanding GDP as well. The momentum in the labor market will slow down in turn: 650,000 jobs will have been created in 2017, but in 2019 the number of new jobs will not hit the 300,000 mark. Because of this, household income will not expand as strongly as it did this year and in the two previous years and private consumption will gradually weaken over the forecast horizon. The German economy is expected to return to a flatter growth curve. Capacity utilization will decline slightly again and the boom will have passed its peak.

However, growth could be higher than forecast here, particularly later in the forecast horizon, for financial policy could very well sustain more momentum than assumed. Regardless of the outcome of the government formation process, even if a new German election is held, any new government will most likely take advantage of the considerable margin for fiscal maneuver and either reduce taxes and social security contributions significantly or increase transfer payments. Since at this time we do not know how measures with very different effects will be designed, the present forecast is, as usual, based on the fiscal status quo. Were the state to implement supplementary measures instead, the German economy could grow at a much higher level. In view of the pace of political decision-making processes, this is more likely to kick in 2019. For example, measures worth the frequently debated volume of 15 billion euros could result in an increase in the growth rate of up to half a percentage point.

The fiscal margin for maneuver should not be overestimated. Germany’s financing surplus will be 47 billion euros this year and should rise to 54 billion euros by 2019. However, a major portion of the surplus in the public budget is a result of the favorable economic situation – it is not permanent and should not be used for long-term planning. And the public sector is currently benefiting from unusually low interest rates. As monetary policy is normalized, the savings associated with low interest rates will gradually decrease.

Measures targeted at supporting short-term economic growth are not appropriate in the current environment. In view of the current boom, financial policy measures should focus on positively influencing the German economy’s longer-term growth trend. The looming demographic shift is an unfavorable factor that challenges policy makers to make the general conditions for investment in Germany more attractive. As the working age population declines, the remaining labor pool must be able to work more productively. And when there are fewer and fewer working age people in Germany, relatively more people must want to enter the labor market and be as productive as possible. One way to achieve this is reducing the tax and transfer burden on labor. Another appropriate measure could be based on targeted public expenditure with the character of investment – in education-related or infrastructure projects. Companies also need more incentives to invest in Germany’s capital stock.

The external environment continues to pose uncertainty for economic development in Germany. In many respects, the course of economic policy in the USA is still ambiguous, and the plans its government announces are being implemented hesitantly. Should the U.S. terminate trade agreements, German exporters would also feel a negative impact from the resulting constriction in the international flow of goods – a scenario the present forecast does not consider.

The European environment harbors other major risks, although Brexit has not yet seriously weakened the German economy. In this forecast, we assumed that the economic relationship between the EU and the UK would not change within the forecast horizon: either the exit process would be canceled, or a follow-up treaty would be concluded that creates a climate for trade and investment similar to that of the EU treaty. If such an agreement proves impossible, Brexit could impair the European and German economies more than assumed here.

And further risks may also arise from the economic situation in the euro area. In the wake of reining in expansionary monetary policy, a faster rise in the interest rate than assumed here could weigh on bank stability in many countries, and thus – in the worst case – reigniting a financial crisis in the euro area. This would noticeably weaken the European and German economies.

DIW Economic Outlook in: DIW Wochenbericht 50/2017

Wed, 13 Dec 2017 11:00:00 +0200
The potential for green public procurement is still largely unexploited in Germany Public purchases can make a valuable contribution to decarbonizing the economy – Despite an upward trend, only 2.4 percent of public contracts in Germany include green criteria – Policy action is needed in order to fully exploit the potential

Green public procurement, by which public authorities choose their suppliers of goods and services not only based on price but also according to environmentally friendly criteria, is still very much underused in Germany, a study by the German Institute for Economic Research (DIW Berlin) shows. Though the practice has been on the rise these past years, its use remains marginal: an analysis of public contract data shows that in 2015, only 2.4 percent of all public contracts awarded in Germany used green criteria.

“The trend is encouraging, but the potential for green public procurement remains largely untapped,” says Olga Chiappinelli, one of the study’s authors. “And yet, buying green is a promising way for public authorities to contribute to the decarbonization of the economy: it allows them to reduce the environmental impact of their purchases; to create favorable market conditions for green technologies, products, and services; and to set a good example.”  

In Germany, government purchases account for 18 percent of total consumption and 11 percent of total investment, and, in some sectors, such as the transport sector, public authorities command an overwhelming share of the market. Public procurement can therefore be exploited to drive the economy towards more sustainability – the more so as the country struggles to meet its 2020 greenhouse gas emission reduction targets.

Tue, 12 Dec 2017 09:43:00 +0200
Application Portal for the GC PhD Program Is now Open The application portal for the GC PhD Program is now open! We look forward to applications from highly qualified and motivated postgraduates from around the world.

All relevant information, application documents and the online application form can be found here.

To learn more about the Graduate Center and our PhD program, visit our program section or download the flyer.

Tue, 12 Dec 2017 09:29:00 +0200
Helene Naegele has successfully defended her dissertation Helene Naegele, who works at the Competition and Consumers department, has successfully defended her dissertation at the Technische Universität Berlin.

The dissertation with the title "Firm Strategies and Consumer Behavior under Market-Based Sustainability Policies" was supervised by Prof. Dr. Pio Baake (DIW Berlin, Technische Universität Berlin) and Prof. Dr. Christian von Hirschhausen (DIW Berlin, Technische Universität Berlin).

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

Mon, 11 Dec 2017 02:55:00 +0200
The SOEP vocational training program: A model for success Seventh cohort of trainees in market and social research (FAMS) started in September Since autumn of 2011, the SOEP has been offering in-house traineeships to students who are studying to be specialists in market and social research (Fachangestellte für Markt- und Sozialforschung, FAMS), a three-year degree program that is part of the German dual system of vocational training. Specialists in market and social research are responsible for organizational and operational tasks in diverse areas of empirical social research, for instance, in conducting surveys and other forms of data collection. The seventh cohort of FAMS students started in September: Martin Gerike from Berlin and Omar Alshafai from Damascus, Syria.

The two graduates from the first cohort, Janine Napjeraj and Florian Griese, were hired by the SOEP after graduating in summer 2014. They provide support to the SOEP research staff in survey management and on one project with outside funding. The two FAMS from the second and third cohorts, Marius Pahl and Carolin Stolpe, started university studies in business information technology and media information technology, respectively.
They both continued working for the SOEP as student assistants. Marvin Petrenz, who was part of the fourth cohort of FAMS, completed his FAMS degree in 2016. Since then he has been working successfully on several SOEP projects. Selin Kara and Stefan Zimmermann, who started in 2015 in the fifth cohort, are currently in the third year of the program. Philipp Kaminsky, who started last year in the sixth cohort, has just entered his second year of training.

FAMS trainer Knut Wenzig is enthusiastic about the program: “By the end of their training, FAMS can confidently carry out the full range of tasks of a research data infrastructure from questionnaire development, data preparation, and documentation
to international user support. The SOEP benefits greatly from their skills and reliability. And they benefit from working in an outstanding research environment.”

“As a Leibniz Association research infrastructure, we started early not only in fostering young researchers but also in expanding opportunities for vocational training”, said SOEP Director Jürgen Schupp. He is convinced that an outstanding research infrastructure like the SOEP needs highly skilled specialists in market and social research who do sophisticated research-oriented work. “Our two new FAMS trainees are an ideal complement to our team. Our users are also getting to know and appreciate them for the competent and reliable services they provide as part of the SOEP”.

Fri, 08 Dec 2017 03:27:00 +0200
Clara Welteke has successfully defended her dissertation Clara Welteke, who works at the Public Economics department, has successfully defended her dissertation at the Freie Universität Berlin.

The dissertation with the title "Direct and Indirect Effects of Social Policies on Labor Supply Decisions - Empirical Evidence from Germany" was supervised by Prof. Dr. Peter Haan (DIW Berlin, Freie Universität Berlin) and Prof. Dr. Albrecht Glitz (Pompeu Fabra University).

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

Thu, 07 Dec 2017 11:35:00 +0200
International Investments and Current Account Imbalances: The Importance of Valuation Changes Global capital flows have strongly increased from the 1980s until the outbreak of the financial crisis. As a result of this development, Germany's foreign investment has risen to around 250 percent of gross domestic product while foreign investments in Germany have increased to about 200 percent of Germany’s gross domestic product. This positive difference between Germany’s assets and liabilities is a result of the country’s continuous current account surpluses, which represent net financial flows – the difference between outflows and inflows. Investments abroad offer investors the opportunity to diversify their savings and possibly generate higher returns than in Germany. In return, however, foreign investment also entails risks; fluctuations in price and exchange rates can lead to high losses. Potential value fluctuations on international investments are relevant for Germany. German policy advisors controversially discuss whether additional investment in domestic infrastructure or research and development would yield higher and less volatile returns than some of Germany’s foreign investments.

Thu, 07 Dec 2017 11:00:00 +0200
In Germany, approximately 1.8 million workers eligible for the minimum wage are earning less The introduction of the minimum wage in Germany led to significant increases in wages –– However, around seven percent of eligible workers earn less than minimum wage, with the marginally employed and employees at small businesses being particularly affected –– When one also takes into account workers who are not eligible for a minimum wage, such as freelancers, a total of around 4.4 million people in Germany earned less than 8.50 euros gross per hour in 2016 –– Inspection and sanctions mechanisms need to be improved as do methods for recording work hours

A new study from the German Institute for Economic Research (DIW Berlin) and the University of Potsdam shows that while the introduction of a minimum wage has led to a significant increase in low wages, not every worker who has the right to a minimum wage is being compensated accordingly.

Wed, 06 Dec 2017 11:00:00 +0200
Expansive monetary policy: Early exit from bond purchase program could reduce GDP growth and inflation in the euro area The following study from DIW Berlin examines the effects of different exit scenarios from the European Central bank’s bond purchase program on the European economy – exiting early would especially depress the inflation rate

What if the ECB were to reduce its bond purchase program by more than what it reported at the end of October? What if it reduced its bond holdings quicker or earlier? DIW Berlin economists Marius Clemens, Stefan Gebauer, and Malte Rieth investigated what implications there would be for economic growth and inflation in the euro area.

The European Central Bank has been buying up government bonds from euro countries against the backdrop of very weak price dynamics. The ECB’s bond holdings have since grown to almost two trillion euros. In January, the ECB will reduce its monthly asset purchases from 60 to 30 billion euros. “Little by little, the ECB will have to not only cut back on asset purchases, but reduce its bond holdings as well,” says Clemens. “It can do this by not replacing money from expiring bonds or even by selling the bonds before maturity.”

Wed, 06 Dec 2017 09:45:00 +0200
Stefan Liebig, new board member at the German Institute for Economic Research as of 2018 On January 1, 2018, Liebig will become director of the Socio-Economic Panel (SOEP) and a member of the institute’s Executive Board

Stefan Liebig, a professor of sociology at Bielefeld University, will succeed Gert G. Wagner as a member of the German Institute for Economic Research’s Executive Board on January 1, 2018. Having reached retirement age, Wagner (64) is relinquishing his position. Fellow Executive Board members Marcel Fratzscher and Angelica E. Röhr will continue as president and managing director, respectively. At the beginning of 2018, Liebig will also take over as director of the Socio-Economic Panel (SOEP) research infrastructure at DIW Berlin. Jürgen Schupp, the current director, will remain at SOEP as its deputy director and Gert G. Wagner will join as “Visiting Senior Research Fellow.”

A research fellow at SOEP since 2007, Liebig (54) has used SOEP-generated data in his research for many years. His work focuses on perceptions of social inequality and the analysis of social structures. He is a member of the German Data Forum (Rat für Sozial- und Wirtschaftsdaten, RatSWD) and the Council for Scientific Information Infrastructures (Rat für Informationsinfrastrukturen, RfII). He has been a professor at Bielefeld University since 2008. After receiving his habilitation teaching qualification from LMU Munich in 2004, Liebig taught at Trier University and the University of Duisburg-Essen.

“I am very pleased that we were able to acquire Stefan Liebig as a second scientific member of the Executive Board and that, together with Jürgen Schupp, he will further enhance SOEP, an extraordinarily successful research infrastructure,” said Axel Weber, chairman of the institute’s Board of Trustees. “I would also like to thank Gert G. Wagner for his tireless commitment to SOEP and DIW Berlin.”

President Marcel Fratzscher of DIW Berlin commented, “In Stefan Liebig, we have been able to acquire an outstanding scientist for the DIW Berlin Executive Board and SOEP. I look forward to his arrival and at the same time would like to express my gratitude to Gert G. Wagner for our excellent collaboration over the past years.”

Fri, 01 Dec 2017 09:55:00 +0200