Press Releases

Current and older Press Releases of DIW Berlin
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22 October 2015

Municipal energy and water suppliers expand investment

Unlike the investment of core municipal budgets, public companies’ investment in energy and water supply is not decreasing – DIW experts find no connection among regional financial power, shifting demographics, and investment

Countless municipalities in Germany are investing too little, which is primarily having a negative impact on infrastructure. However, for the municipal energy and water utilities—that is, public companies outsourced from municipal budgets—this is not the case. As a recent investigation conducted by the German Institute for Economic Research (DIW Berlin) shows, the investment of public energy and water supply companies is increasing and comparable in trend to that of private energy and water suppliers. For example, the purely public companies’ net investment in network infrastructure increased from 1.4 to nearly 2.3 billion euros between 2005 and 2012. Although the regional financial power and demographic trends in the service areas vary greatly, these factors have so far had little impact on the investment expenditures of the public energy and water supply companies: Municipal providers in financially weak federal states do not invest less than do those in financially strong ones, and municipal providers in shrinking regions invest no less than those in growing ones. “However, this result does not necessarily hold true for other municipal services that have not yet been outsourced,” explain DIW economists Astrid Cullmann, Maria Nieswand, and Caroline Stiel in their study, “because the energy and water supply differs fundamentally from other municipal activities to the extent that it is usually profitable, and thus mostly independent of a municipality’s financial situation.”

8 October 2015

Joint Economic Forecast Autumn 2015: German economy stable but needs effective policies to nurture growth

The German economy is experiencing a moderate upturn. Gross domestic product will increase by 1.8 percent in 2015 and in 2016 respectively. Growth will be driven by private consumption. In view of the world economy’s modest growth, exports are only expected to rise slightly, especially as the stimulating effect of the euro’s depreciation gradually starts to fade. There will be a more rapid expansion in employment, although unemployment is expected to grow slightly in 2016 as the large number of refugees currently arriving in Germany gradually impacts the labour market. Public budgets are expected to post a surplus of 13 billion euros in 2016. This will be significantly lower than the surplus of around 23 billion euros forecast for 2015, mainly due to additional expenditure related to tackling the influx of refugees.

7 October 2015

East-West Gap in Private-Sector Research, Development, and Innovation in Germany is Structurally Related

Very few research-intensive sectors and larger enterprises—research concentrated in public-sector and publicly funded research institutes and universities

Over the past two decades, research and development (R&D) activities in eastern Germany have increased substantially, albeit to a lesser extent than in western Germany. Furthermore, R&D in eastern Germany was primarily conducted by public-sector research institutes and less so by universities and businesses. In 2013, overall, R&D activities in eastern Germany reached 86 percent of the western German level; in the private sector, eastern Germany reached just under 50 percent of the western German level. These are the key findings of a recent study conducted by the German Institute for Economic Research (DIW Berlin). This gap is due to the economic and corporate structure: research-intensive sectors and larger enterprises that conduct more research and development overall than smaller enterprises are less frequently located in eastern Germany. According to DIW expert, Alexander Eickelpasch, “Given the structural differences, an approximation to the western German level is not anticipated in the foreseeable future.” However, too much importance should not be attached to this because, “There is also a great deal of regional dispersion in the R&D activities of the private sector in western Germany.”

1 October 2015

Study on “Women’s Quota”: Long-Term Positive Effects Anticipated

Binding quota could combat gender stereotypes – quality of talent pool expected to improve overall – no discrimination against men anticipated

On January 1, 2016, a fixed 30-percent gender quota for supervisory boards will come into force in Germany. This is binding for all listed companies that also have employee representation on their supervisory boards (full codetermination). In the run-up to the introduction of the quota, critics had alleged that the legislation, dubbed the “women’s quota,” discriminated against men and prevented the best candidates being appointed. Dr. Norma Schmitt, a researcher in the field of gender studies at the German Institute for Economic Research (DIW Berlin), examined concerns like these in a variety of research studies. Her conclusion is that, “Early research results indicate that a higher share of female supervisory board members leads to an increase in the number of women in senior management and generally improves women’s chances of promotion. This can only be achieved, however, if convincing efforts are made to meet the target.” Companies would also benefit from the implementation of a gender quota as studies have shown that a 30-percent share of women results in a critical mass and, when this is reached, we can observe a favorable impact on company performance as a result of gender diversity on supervisory boards.

25 September 2015

Increasing concentration of asylum seekers among certain EU member states

DIW study examines distribution of refugees among the member states according to population and economic power – integration of refugees into the labor market a major challenge

The European Union is currently experiencing its largest influx of asylum seekers, yet the distribution of these refugees across the member states is highly uneven. While the majority of countries take in fewer asylum seekers as would be appropriate given their respective populations and economic strengths, in the first half of the year, Germany took in nearly three times as many refugees in relation to its total population and twice as many in relation to its economic strength as would have been the case assuming a uniform distribution across all EU countries. As well, the integration of recognized refugees into the German labor market has proven difficult.

18 September 2015

Economic output in Germany will increase by 1.8 percent in 2015 and 1.9 percent in 2016

The euro area continues to recover – emerging countries’ economies are faltering – public budget with surplus despite challenges posed by increasing number of refugees 

The German economy remains on track, even as things are getting rockier: The researchers at the German Institute for Economic Research (DIW Berlin) forecast a 1.8 percent increase in GDP for this year and a 1.9 percent increase for next year. In that instance, they are sticking to their forecast from June. However, they emphasize that the risks have not lessened. Quite the contrary: In the euro area, many countries are still struggling with high private and public debts, problems in the banking sector, and a high level of unemployment. Growth in China and other emerging countries is fragile. This applies all the more considering that in the course of the forthcoming U.S. turnaround in interest rates, increased capital could flow out of the emerging markets, which could additionally reduce their economic momentum.

9 September 2015

25 years of German Unity: Political orientations still different in East Germany and West Germany

Discrepancies primarily in party affiliation and voter turnout –attitudes toward the welfare state are converging – support for the Left Party remains marginal in the West

Twenty-five years after reunification, East and West Germans continue to show clear differences in their political preferences. This is the result of an analysis carried out by the German Institute for Economic Research (DIW Berlin). The investigation covers the years 1990 to 2014 and is based on the most recent data from the long-term Socio-Economic Panel (SOEP) study, collected by DIW Berlin in partnership with TNS Infratest Sozialforschung; official data from the Federal and State Election Officials; and data from the German General Social Survey (ALLBUS).

"Even though two East Germans—Chancellor Angela Merkel and President Joachim Gauck—hold the top political positions in Germany, there only limited signs of unity in citizens’ political attitudes and their participation in the political process," explains Martin Kroh, Deputy Head of the SOEP at DIW Berlin, Professor of Political Science at Humboldt Universität zu Berlin, and one of the authors of this study.

2 September 2015

No trend reversal: Gasoline and diesel continue to dominate road transport

Alternative drive systems like electric and hybrid models, and alternative fuels like LPG and natural gas, continue to play a minor role – policy should focus on efficiency improvements to reduce CO2 emissions from conventional fuels and increase the environmental friendliness of road transport – preferential tax treatment for diesel should be abolished

Gasoline and diesel will continue to dominate the fuel demand in German road transport; electric, hybrid, and fuel cell cars will continue to play a subordinate role. This is the result of a recent study conducted by the German Institute for Economic Research (DIW Berlin).

26 August 2015

Investment in research and development fueling economic growth

Germany's R&D intensity above average in international comparison – automotive industry, in particular the motor vehicle industry, accounts for 85 percent of research expenditure – public research growing in importance

A country’s investment in research and development (R&D) is a key driver of its economic growth. This is the conclusion of a study conducted by the German Institute for Economic Research (DIW Berlin) on behalf of KfW Bankengruppe. The study, for which the researchers employed various econometric methods such as panel models and time series models, analyzes the relationship between R&D and economic growth in Germany and other research-intensive OECD countries over the past few decades. “An increase in research spending is already starting to lead to a significant increase in gross domestic product in the following year,” explains Heike Belitz, who led the study.

19 August 2015

Real net assets of private households in Germany shrank between 2003 and 2013

DIW researchers investigated the development of assets while taking inflation into account – Germans’ investment behavior is one of the essential factors contributing to the decline in real assets – results contradict the national accounts

The net assets of private households in Germany experienced extremely weak development between 2003 and 2013: They increased by an average of only 500 EUR, or 0.4 percent. Accounting for inflation, households in fact lost nearly 15 percent of their net assets—which corresponds to an average of more than 20,000 EUR. The real value—that is, the purchasing power of the assets—therefore declined significantly. This is the conclusion of a study conducted by the German Institute for Economic Research (DIW Berlin) on behalf of the Hans Böckler Foundation, using data from the Income and Expenditure Survey (EVS). According to the German Socio-Economic Panel (SOEP), the real net assets of households in Germany also declined significantly, by more than eleven percent between 2002 and 2012—even despite a consistently high savings rate, for the most part, of more than 9 percent per year. The study’s authors, Markus Grabka and Christian Westermeier, see the cause primarily in the weak performance of owner-occupied real estate. However, Germans’ investment behavior also played a role: "Many people prefer to invest their assets in low-risk and therefore low-return investments such as savings accounts, checking accounts, building loan contracts, and Riester pensions, which often don’t even make up for the inflation," says Grabka. In light of the results, the economic researchers argue in favor of a more targeted promotion of individual asset growth—which will also serve to reduce the high level of wealth inequality in Germany.

6 August 2015

Germans like going to work

Only one in eight people complain about their job – temporary workers and job-seekers in part-time employment are least satisfied – satisfaction strongly depends on personal characteristics and feelings.

The mood of the German labor market continues to be positive, so it is not at all surprising that the attitude of the German workforce is, too. A new study by DIW Berlin reveals that the vast majority of workers are satisfied with their jobs. Interestingly, this attitude is independent of the general economic situation. “People do not experience greater job satisfaction in difficult economic times just because they are happy to have work,” says Karl Brenke, labor market expert at DIW Berlin. “Conversely, they are not automatically harder to please when evaluating their jobs in periods of economic expansion.” The study is based on data from the Socio-Economic Panel (SOEP) that was collected by the survey institute TNS Infratest Sozialforschung on behalf of DIW Berlin and covers the years up to 2013.

29 July 2015

Childhood experiences shape financial behavior in adulthood

Parents exert indirect influence on the way in which their children will deal with money and financial products in the future – schools can promote competent financial behaviors

"Waste not, want not“: Children whose parents teach them this concept—and offer similarly wise directives when it comes to money and finances—will often make better financial decisions as adults. This is evidenced by a new study conducted by the German Institute for Economic Research (DIW Berlin). Many people do not know how to invest their assets in the best possible way or how to obtain a favorable loan. "Financial literacy—for example, in the form of special financial training—can indeed help improve the financial behavior of adults. But there are other influencing factors that haven’t been explored as much,“ says Lukas Menkhoff, financial expert at DIW Berlin. Together with DIW economist Antonia Grohmann, Menkhoff investigated how family background and other childhood experiences influence financial literacy. “The results of our study show that parents teaching their children about financial matters critically influences financial literacy—and with that, financial behavior. School also plays an important role,“ explain the study’s authors. Thus the likelihood of someone spreading his or her wealth across multiple types of investments is 13 percent higher if that person studied economics in school. In fact, individuals with a qualitatively better education even have, on average, a 23 percent more broadly diversified financial portfolio.

29 July 2015

German industry is spending more money on research and development than ever before

Manufacturing companies increased their expenditures by more than a fifth between 2010 and 2013 – research-intensive and large companies primarily responsible for the increase – development more dynamic in Germany than in other European countries

In 2013, industrial companies in Germany spent a total of 57.2 billion EUR on research and development (R&D). This corresponds to an increase of 22 percent over the year 2010, as evidenced by a new study conducted by the German Institute for Economic Research (DIW Berlin) based on data from the Federal Statistical Office. The R&D intensity – that is, the ratio of research and development expenditure to the gross value added – has also increased, just as the number of employees in this sector has increased. During the financial and economic crisis of 2008 and 2009, the companies reduced their R&D expenditures, but then expanded more rapidly in the post-crisis years between 2010 and 2013 (by an annual average of 6.8 percent) than they had in the pre-crisis years between 2004 and 2008 (by an annual average of 4.3 percent). However, this was also due to the fact that the companies first had to catch up to their pre-crisis levels after the crisis-induced slump. Between 2008 and 2013, R&D expenditures increased by an average of 3.2 percent every year. “As far as spending on research and development is concerned, German industry is generally headed in the right direction,“ says Alexander Eickelpasch, a research associate in the Firms and Markets Department at DIW Berlin. “However, we must not ignore the fact that it is primarily the large companies and the already research-intensive industries that are spending more on research and development, while small and medium-sized companies have not increased their investment in R&D by that much. Although this is causing the upswing of industry research to lose breadth, it is also worth noting that not every company needs to conduct research to be successful in the market.”

16 July 2015

European Commission has missed the opportunity for innovation in CO2 intensive materials

Researchers in the Climate Strategies network found that the European Commission’s proposal for carbon leakage protection post-2020 will fail to realize a large share of innovation opportunities in materials industries like steel and cement. “This is a major missed opportunity since steel and cement alone account for 38% of industrial CO2 emissions in Europe”, said Karsten Neuhoff.

2 July 2015

25 Years Later: DIW Berlin's Experts analyse German and European Monetary Union

German monetary union on July 1, 1990 was politically necessary despite painful economic consequences – Greece, similar to the GDR back in the 1980s, in urgent need of reform – the crisis of European monetary union potentially boosts integration

Precisely 25 years ago, on July 1, 1990, German monetary union came into force. On the same day, capital controls in Europe were abolished, creating the basis for European monetary union and the euro. Both German and European monetary union were and still are being heavily criticized and debated. Was the design of German monetary union flawed? Was it a mistake to adopt the euro? On the occasion of this historically important date, experts at DIW Berlin addressed these questions.

25 June 2015

Upswing of German Economy Prevails, Bolstered by Strong Domestic Demand

GDP is set to grow by 1.8 percent this year and 1.9 percent next yearthe global economy is slowly picking up steam, and the euro area is showing solid growth performancepossible risks such as Greece leaving the euro area are creating a strain on the economy

The German economy is continuing on an upward trend but, due to unexpectedly weak growth at the beginning of the year, will not perform quite as strongly this year as initially expected: DIW Berlin’s economic experts are forecasting a rise in gross domestic product (GDP) of 1.8 percent for the current year. This figure is lower than an earlier estimate from March, when they were expecting growth to hit 2.2 percent. They are anticipating similar growth for next year with a rise of 1.9 percent. Consumer spending is expected to be a major driver of this growth, thanks in part to a continuing increase in the number of new jobs created. Businesses, on the other hand, are holding back somewhat on investment spending. It cannot be denied that they are facing many risks: a breakdown in negotiations with Greece, followed by Greece leaving the euro area, could result in turmoil in financial markets. A renewed flare-up of the conflict between Russia and Ukraine would also have a negative impact on the global economy and consequently on investment activity.

19 June 2015

Income Inequality Virtually Unchanged since Steep Rise up until 2005

DIW Berlin’s researchers warn: employment does not necessarily prevent poverty11.5 million people in Germany are at risk of povertyone in five in eastern Germany is living below the poverty risk threshold

 Real disposable household incomes in Germany rose by an average of five percent from 2000 to 2012. At the same time, according to a study by the German Institute for Economic Research (DIW Berlin), the gap between rich and poor has grown in the past decade. Income gains are distributed very unequally between the various income groups: while the incomes of the top ten percent increased by more than 15 percent between 2000 and 2012, they remained virtually unchanged in the middle-income groups. The bottom 40 percent have up to four percent less in real terms than at the turn of the millennium. By 2005, the inequality of households’ disposable income rose considerably according to DIW Berlin’s study and since then it has remained at this level.

5 June 2015

Shutting Down the Nuclear Power Plants: Electricity Supply in Germany Remains Secure – Dismantling and Disposal Pose Major Challenges

DIW Berlin’s energy experts argue for a public-law nuclear fund – nuclear power plant operators’ provisions for dismantling and atomic waste disposal are not enough

Even by the end of 2022, after the very last German nuclear power plant has been removed from the grid, the lights in this country will not go out: The electricity supply remains secure, as DIW Berlin’s calculations attest to. “In Germany, we are already producing far more electricity than we are using,” explained Claudia Kemfert, Head of the Department of Energy, Transportation, and Environment at DIW Berlin. “The impending shutdown of the Grafenrheinfeld nuclear power plant will hardly change that. In 2025, we’ll still have enough electricity and will in fact continue to export to other countries.” Even bigger challenges lie ahead with regard to the dismantling of the nuclear power plants and the disposal of high-level radioactive waste, according to energy experts Kemfert, Christian von Hirschhausen, and Cornelia Ziehm: The provisions that have been set up by the nuclear power plant operators for these tasks, which currently amount to roughly 38 billion EUR, are not enough. Furthermore, because the provisions are not protected against insolvency and the energy companies could shirk their responsibilities through corporate restructurings, the study’s authors propose the creation of a public-law fund into which the provisions for dismantling and final disposal can be transferred. For the additional costs that are expected, the authors suggest that legislators set up a reserve liability.

20 May 2015

Mandatory Direct Marketing Raises the Financing Costs for Wind Power Projects

Plant operators must sell their electricity themselves – costs of forecast deviations and site-specific changes in revenue make wind power unnecessarily expensive

The 2014 reform of the Renewable Energy Sources Act (Erneuerbare-Energien-Gesetz, or EEG) mandates that operators of new large power plants market their electricity directly in order to create incentives for good wind forecasts and clever sales strategies. However, this also creates new risks about the level of costs caused by forecast deviation and differences in site-specific revenues. Thus mandatory direct marketing can result in an increase of financing costs—and therefore also production costs. “These additional costs must eventually be borne by electricity consumers. Hence the creation of new risks for investors should be avoided in further developments of the EEG ," said DIW energy expert Karsten Neuhoff.

13 May 2015

Tighter Capital Requirements For Investing in EU Government Bonds: Greek Banks Would Incur Problems - But Reform Would Nevertheless Be Desirable

A tightening of capital requirements for banks that invest in EU government bonds would primarily create a significant additional demand for capital for Greek banks. This is the conclusion of a study conducted by the German Institute for Economic Research (DIW Berlin), which calculated the additional capital requirements such a reform would create for German, French, Swedish, and Greek banks. As of now, financial institutions do not have to use equity capital for investments in EU government bonds, as they do in the case of investments in corporate loans. If this exemption privilege were to be abolished, as was recently proposed by the European Systemic Risk Board (ESRB), it would, according to DIW’s calculations, cost the Greek banks an additional 1.8 billion euros—about nine percent of the existing core capital requirements. In Germany, a reform of the existing regulations would be reflected in the budget with an additional 3.34 billion euros (1.8 percent of the core capital); French banks would need 3.52 billion euros of additional core capital (1.2 percent); and Swedish banks would, in fact, need only 80.6 million euros (0.14 percent). "Especially in light of the European government debt crisis, the privileging of EU government bonds over corporate loans does not make sense,“ said DIW research director Dorothea Schäfer and her co-author, Dominik Meyland. "The taxpayers could also benefit from an abolishment of the EU sovereign bonds’ privilege, as the banks themselves would then provide security against their risks to a greater extent.“ Bank risk and public debt risks would be more strongly decoupled, and the European financial system could be stabilized overall.

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