Press Releases

Current and older Press Releases of DIW Berlin
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6 December 2017

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.

6 December 2017

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.”

1 December 2017

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.”

29 November 2017

Higher employment rates and more money in the pension fund

Two DIW studies on the partial retirement scheme and raising the normal retirement age: simulations show positive employment effects and fiscal implications

A normal retirement age that increases relative to the rise in life expectancy after 2030 could help keep the funding of the statutory pension insurance scheme stable without the pension level decreasing further. Depending on the scenario, a partial retirement scheme could also relieve retirement funds and raise employment rates. These are the most important results from two DIW studies on the topic of retirement.

29 November 2017

DIW Economic Barometer November 2017: euphoric expectations signal a strong end to the year

The economic barometer of the German Institute for Economic Research (DIW Berlin) once again reports exceptionally strong growth in the final quarter of 2017: the index level increased to 113 points. GDP should thus continue to outperform at a read of 0.8 percent in the fourth quarter. “Caution should be exercised when interpreting the euphoric sentiment indicators,” warns Ferdinand Fichtner, head of forecasting at DIW Berlin. “After the election, many companies should have expected noticeable economic stimuli – and whether this still applies after the failure of the Jamaica coalition talks remains to be seen.” Indicators reflecting the current situation have subsided; industrial production has also declined recently.

22 November 2017

German companies strengthen research and development – both domestically and abroad

The R&D expenditure of German companies abroad has more than doubled compared to 2003. At the same time, their domestic investments are increasing sharply – The majority of the investments can be attributed to the automotive engineering and pharmaceutical industries – The share of foreign companies in R&D investments in Germany is sinking.

In recent years, German companies have invested more in research and development (R&D) abroad. Between 2003 and 2015, the annual volume of investments abroad more than doubled from 10.9 to 24 billion euros. Thus, the foreign share of German companies’ total R&D investments amounted to 35 percent. However, domestic expenditure for research and development rose by 76 percent to almost 45 billion euros. In total, locations in Germany accounted for 60 percent of the additional R&D investments, while locations abroad accounted for the other 40 percent.

These are the results of a study conducted by DIW Berlin that analyzed annual investments in research and development of German companies with international activities using official data. “The development of R&D expenditure in Germany and abroad is largely parallel in the two sectors,” says study author Heike Belitz. An increase or decrease in R&D in Germany often goes hand in hand with a similar change abroad. “The correlation is clearly evident, although it does not mean there is a causality,” says Belitz.

16 November 2017

Federal state comparison of renewable energy sources: Baden-Württemberg is the new leader, beating out Mecklenburg Western Pomerania and Bavaria for the top spot

Baden-Württemberg, Mecklenburg Western Pomerania, and Bavaria are the leading federal states in the field of renewable energy. That is the result from a comparison of the federal states which was compiled by the German Institute for Economic Research (DIW Berlin) and the Center for Solar Energy and Hydrogen Research Baden-Württemberg (Zentrum für Sonnenenergie- und Wasserstoff-Forschung Baden Württemberg, ZSW) on behalf of and in cooperation with the Renewable Energies Agency (Agentur für Erneuerbare Energien, AEE) for the fifth time. Using 59 indicators, the analysis assesses the federal states’ political efforts and achievements in using renewable energy sources as well as the related economic and technological changes in detail. Hesse, Berlin, and the Saarland were ranked the lowest.

8 November 2017

Why are fewer women working in STEM fields? Girls underestimate their math abilities in school

Boys consider themselves to be more gifted in mathematics than their grades indicate, whereas girls think their language skills are stronger. Differences in students’ self-evaluation of their skills are evident by the fifth grade and remain present throughout higher grades

Boys think higher of their math abilities in school than girls do – to an extent that is not justified by their actual grades. Research by the German Institute for Economic Research (DIW Berlin) shows that by the fifth grade, male and female students’ respective self-assessments of their math skills deviate from each other significantly. This difference remains present to a large extent up to and throughout the twelfth grade. These findings are the results of a study by Felix Weinhardt, a research associate in the Department of Education and Family at DIW Berlin, who evaluated data from the National Educational Panel Study (NEPS), which is representative for German students.

8 November 2017

Abolishing the final withholding tax leads to tax revenue losses and barely burdens high-income groups

Small revenue and distribution effects – Overall, slight tax revenue losses due to a period of low interest rates – Raising the final withholding tax rate to over 25 percent would result in moderate additional revenue

Abolishing the final flat-rate 25 percent withholding tax on unearned income makes sense neither from a fiscal nor a distribution point of view as long as interest rates are so low. If capital income were to be reintegrated into the income tax rate, slight tax revenue losses of 73 million euros would be expected, when taxing 60 percent of dividends and capital gains (partial-income rule) and fully deducting income-related expenses. This is the conclusion of a recent study by the German Institute for Economic Research (DIW Berlin). “Abolishing the withholding tax doesn’t do much in terms of fairness if you understand ‘fair’ to mean higher taxes on high capital income,” says DIW tax expert Stefan Bach. High-income groups would barely be burdened by the abolishment of the withholding tax while medium and low-income groups would experience marginal reductions in dividends. In addition, the amount of administrative burdens in the taxation procedure would increase. By contrast, increasing the withholding tax would lead to moderate additional tax revenues and have a progressive impact, but could worsen investment conditions in Germany.

2 November 2017

Youth in Europe have major labor market problems despite lower unemployment

The youth unemployment is still much higher than the unemployment of those aged 25 years and older – Decrease in unemployment primarily due to a drop in the number of young people and the greater number remaining in education – Political measures against youth unemployment prove ineffective

Although the youth unemployment rate in the EU has plummeted in recent years, it is still difficult for teens and young adults to find employment. For example, the unemployment rate in the 15-24 age group is still 2.5 times as high as that of person aged 25 years or more. The decrease in unemployment is primarily caused by the demographic shift and a lower participation in the labor market due to changed education behavior. Political measures for countering youth unemployment, such as the EU Youth Guarantee, do not have recognizable effects. These are the main findings of a current study by the German Institute for Economic Research (DIW Berlin). Newly created employment opportunities for young people are almost exclusively fixed-term jobs. The share of part-time jobs has also increased. Due to their more practical training, young people in Central Europe have fewer problems finding employment than persons 25 years and over, unlike the situation in other parts of Europe – particularly in the south.

1 November 2017

DIW Economic Barometer October 2017: the German economy’s golden autumn

The German economy’s strong upswing continues. At 112 points, the Economic Barometer published by the German Institute for Economic Research (DIW Berlin) continues to signal GDP growth that is well above average: 0.7 percent in the third quarter and 0.9 percent in the fourth. “The German economy is heading toward 2018 at full speed,” said Ferdinand Fichtner, head of forecasting at DIW.

28 September 2017

Joint Economic Forecast Autumn 2017: Upturn Remains Robust - Amid Mounting Tensions

Press release of the project group "Gemeinschaftsdiagnose": German Institute for Economic Research (DIW Berlin), Halle Institute for Economic Research (IWH), ifo Institute, Kiel Institute for the World Economy (IfW), RWI - Leibniz Institute for Economic Research

12 April 2017

Joint Economic Forecast Spring 2017: Upturn in Germany strengthens in spite of global economic risks

Press release of the project group "Gemeinschaftsdiagnose": German Institute for Economic Research (DIW Berlin), Halle Institute for Economic Research (IWH), ifo Institute, Kiel Institute for the World Economy (IfW), RWI - Leibniz Institute for Economic Research

5 April 2017

Chinese investment strategy in Europe differs according to region

Technology transfer primary motive behind Chinese OFDI in Western Europe; access to EU internal market motivates OFDI in Central and Eastern Europe; factors influencing investment decisions differ based on type of investment

China’s investment strategy in the EU differs depending on the target country. With investment in Western Europe, the main motivation is gaining access to advanced technologies. There, a majority of Chinese capital is invested in M&A – specifically in the acquisition of hidden champions, world leaders in their respective market segments. Investment in Central and Eastern Europe, on the other hand, is more oriented toward new ventures; such investment is more about facilitating Chinese access to the EU's internal market.

These are the findings of a new study conducted by the German Institute for Economic Research (DIW Berlin), which also investigates the precise determinants of the two different types of investment.

Accordingly, the main factors that determine Chinese investment activities are the market size in the target country, and the intensity of bilateral trade between that country and China. When it comes to new ventures, unit labor costs, the size of the industrial sector, and the regulatory density have a negative impact on Chinese investment.

“Sound institutions, which are indicative of heavily regulated, highly competitive markets, tend to deter Chinese investors,” explains study author Christian Dreger, Research Director in the Department of International Economics at DIW Berlin. “Here, Chinese investors may have a different sense of risk from their Western counterparts, who are less reluctant to set up new ventures in highly competitive target regions.” In other respects, however, the determinants of Chinese direct investment differ very little from conventional patterns.

22 March 2017

World Happiness Day: SOEP data show that life satisfaction of Eastern Germans is catching up

People across Germany are happier today than at any other point since German reunification

According to a new analysis of data from the nationally representative, long-term Socio-Economic Panel (SOEP) study, people in both West and East Germany have been happier on average since 2015 than at any other point since German reunification (Figure 1). The substantial increase in life satisfaction from 1990 levels is primarily the result of the catch-up process in East Germany. Yet even 25 years after reunification, the level of life satisfaction in East Germany is still substantially below that in West Germany (Figure 2).

“Although it’s sobering that there is still a difference between East and West, the gap has diminished significantly over the years and is lower now than ever before,” says SOEP Director Jürgen Schupp, who conducted the analysis.

22 February 2017

The austerity policy was counterproductive in Spain, Portugal, and Italy

DIW study showed: To some extent, drastic savings measures neutralized the effects of structural reform. The countries affected relapsed into recession without having improved their financial picture – a balanced policy mixture would have been better.

The austerity measures and tax increases implemented from 2010 onwards did not reduce sovereign debt in Spain, Portugal and Italy as anticipated. Instead, they were among the forces that drove the three economies back into recession. Contrary to popular opinion, the failure of the consolidation strategy is not the result of a lack of the will to reform on the part of the relevant governments. Actually, the dramatic spending cuts and tax increases prevented the reforms that were implemented from unfolding their full effect. That is the result of a new study by DIW Berlin that examined the effects of the austerity policy in Spain, Portugal, and Italy for the period 2010 to 2014.

According to the study, the enormous private household debt in the three countries played a key role in the policy’s negative impact on growth. In Spain, for example, private households had to pay more to service their debt as the result of stricter financing conditions.  As a result, private household debt fell from 87 percent of GDP in 2007 to 60 percent in 2014. “Private households used a large proportion of their disposable income to pay off outstanding debt and had less money available for consumption,” said author Mathias Klein. “Then the government raised taxes and cut spending, which only amplified the effect. The sharp drop in private consumption reduced GDP and the already high unemployment level rose again.”

20 December 2016

Despite political uncertainty, German economy continues to expand – even as employment growth slows down

German economy’s growth rate will drop next year, primarily due to calendar effects – labor market expansion losing some momentum – numerous risks for the global economy

According to a new forecast by the German Institute for Economic Research (DIW Berlin), the German economy’s upward trend will continue through 2017 and 2018 – even though the current global economy is characterized by substantial risks. German GDP growth is expected to amount to 1.2 percent in 2017, a figure that is lower than this year’s 1.8 percent primarily because there will be fewer workdays next year. DIW Berlin’s autumn forecast predicted a growth rate of 1.0 percent for 2017, which has now been adjusted upward. The growth rate should be higher again in 2018, amounting to 1.6 percent.

 

Yet the significant risks to economic development –government elections in several European countries, tough negotiations related to the Brexit, and structural problems in the Italian banking sector, among others – should not be ignored. Germany’s substantial 2016 budget surpluses will decrease significantly in 2017 and completely disappear by 2018, at which point slight deficits may also materialize.

Private consumption, which remains the German economy’s primary growth driver, is expected to decline over the forecast period. The very strong employment growth of the past few years has been losing momentum, and this alone has been dampening income development. Furthermore, higher energy prices will lead to a rise in inflation, which in turn will have a negative effect on purchasing power. The projected inflation rates for 2017 and 2018 are 1.4 and 1.5, respectively. In 2017 unemployment levels will remain low (5.9 percent). Exports are developing favorably, but demand from the EU is likely to suffer in the coming months as a result of the Brexit decision as well as the political uncertainty that is currently plaguing several countries.

21 November 2016

Lack of equal rights regarding financial decisions contributes to women’s lower level of financial literacy

DIW Berlin examined the causes for the gender gap in financial literacy in several countries – Cultural factors play a key role in addition to income, education, and experience – Better financial literacy would mean more financial security for women in retirement

In most countries of the world, women know less about financial matters than men. Socio-demographic factors such as income, age, education, and experience with finances partially explain the gender gap in financial literacy. Cultural aspects, including the role of women in society, are also key factors. These are the findings of a study by the German Institute for Economic Research (DIW Berlin).

The study focused on Germany, the US, and Thailand. Men in Germany and the US outperform women – even women with higher educational levels and female heads of household – on financial literacy tests. In Thailand on the contrary, women know at least as much about financial matters and money as men. “In Thai culture, women often have the financial responsibility in the household. On this point, equality between men and women is greater there than in Germany and the US ,” said Antonia Grohmann, the author of the study.

15 November 2016

Private R&D not necessarily drawn to areas with high public R&D

Germany’s research and development concentrated in urban areas – public research undergoing dynamic development

According to a new study conducted by the German Institute for Economic Research (DIW Berlin), spatial proximity to industrial production plays a greater role for Germany’s private research and development (R&D) than does proximity to publicly funded research institutions and institutes of higher education (IHE).

“Policy should promote transregional networking among research facilities, higher education institutes, and businesses,” recommends DIW economist Alexander Eickelpasch. Areas with lower levels of industrial activity should thus not only promote the transfer of knowledge within the region but also take advantage of public research conducted elsewhere in order to support the local economy. Furthermore, to make better use of knowledge potential at the local level, regional industry should be strengthened – for example, within the framework of industrial development policy.

4 October 2016

People in Germany still more than willing to show solidarity with EU countries in crisis

A study by DIW Berlin shows that almost half the adult population of Germany believes helping EU countries in crisis is the right course of action—around 30 percent oppose it—cuts in welfare spending in the crisis countries are also criticized

Contrary to the image often presented, many people living in Germany support German aid for EU countries in financial crisis. In the second half of 2015, 48 percent of adults considered it to be the right course of action for Germany to help other EU member countries. Around 30 percent opposed this and 20 percent were indifferent. These are the findings of a joint study by the German Institute for Economic Research (DIW Berlin) and Leipzig University, based on data from the Socio-Economic Panel (SOEP). Compared with earlier surveys by Eurobarometer, popular support has not diminished since 2010. Authors Holger Lengfeld, Professor of Sociology at Leipzig University, and Martin Kroh, Deputy Head of SOEP, said that, “Although the financial crisis escalated considerably in some southern European countries during this period and in some years, notably during the Greek crisis, there were a whole host of negative headlines, people are still very willing to show solidarity.”

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