Press Releases

Current and older Press Releases of DIW Berlin
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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.

6 May 2015

Refurbishing Buildings for Energy Efficiency: Could an Energy Efficiency Fund Serve as a Supplementary Financing Model?

To increase the rate at which residential building undergo refurbishments for energy efficiency, innovative financial solutions also need to be considered. For example, some property owners who are currently hesitant to implement thermal retrofit might be encouraged if the investment is funded by a third party (fund) and refinanced based on the energy costs saved with the efficiency measure. Such financing options need to be examined and tested, suggests a new study conducted by the German Institute for Economic Research (DIW Berlin). "It is important to look for innovative solutions, because we are currently squandering many economic benefits through the slow progress of the implementation of energy efficiency measures," said DIW expert Karsten Neuhoff. Even though other countries’ experience with such models is still limited, "the possibility of their implementation in Germany should be thoroughly examined in light of the challenges of energy transition," said Neuhoff. But it seems clear that an energy efficiency fund can only serve as a complement to existing financing instruments, and not as a replacement. The DIW experts believe it is especially necessary to further develop the existing information and advice programs, to strengthen financial support from Kreditanstalt für Wiederaufbau (KfW), and to continue improving qualification and certification in the construction industry in order to sustainably increase the rate of refurbishment.

29 April 2015

Effects of the German G8 High School Reform: Gymnasium Students Are Graduating Younger, But More Students Are Repeating a Grade

DIW Berlin expands empirical basis of G8 impact studies – data include Gymnasium graduation cohorts from 2002 to 2013 – Abitur graduation rates are not affected

Younger Gymnasium graduates, unaffected graduation rates, but more grade repetitions: These are the findings of a recent study conducted by the German Institute for Economic Research (DIW Berlin), one of the leading economic research institutions in Germany, on the effects of the G8 high school reform, which reduced the total number of years German students spend in Gymnasium (Germany’s academic school track) by one year. According to the study, Gymnasium graduates are on average 10 months younger than they would have been prior to the reform. However, this reduction in the graduation age is less than the full 12 months by which the reform has shortened the time spent in Gymnasium. One reason for this discrepancy: More students are repeating grades, especially in the final years at Gymnasium. No significant effect of the G8 reform can be observed on the share of a cohort that graduates from Gymnasium with the Abitur (general university entrance qualification).

22 April 2015

Electric Mobility in Germany: Carbon Emissions Depend on Charging Power - Emissions Reduction Would Require Additional Expansion of Renewables

Joint press release from the German Institute for Economic Research (DIW Berlin) and the Institute for Applied Ecology (Öko-Institut)

Even if the use of electric road vehicles (EVs) were to increase significantly, the total annual power consumption of EV fleets would be small compared to overall power demand. However, uncontrolled charging, which involves the vehicle being fully recharged as quickly as possible after being connected to the power grid, could result in problematic peak loads in the system. This would not be the case with a charging mode that optimizes system costs, such that EV charging is primarily carried at night when demand is lower and at midday when solar power generation is high. The source of the additional power generated and the resultant net CO2 emissions of EVs depend on the charging mode and assumptions about the future power plant fleet. If renewable power generation capacities were to be expanded beyond current targets – enough to meet the electricity demand of EVs – this could result in a net reduction in CO2 emissions of up to 6.9 million tons per annum in 2030. These are the findings of a recent study conducted by the German Institute for Economic Research (DIW Berlin) and the Institute for Applied Ecology (Öko-Institut) as part of a European research project analyzing the impact of electric mobility on the German power system and the CO2 emissions of EVs using various scenarios. “The introduction of electric mobility would only result in a significant reduction in carbon emissions if linked to a more extensive expansion of renewable energy sources than is currently envisaged,” say the authors of the study, DIW Berlin’s Wolf-Peter Schill and the Öko-Institut’s Peter Kasten.

16 April 2015

Joint Economic Forecast Spring 2015: A Strong Upswing Thanks to Cheap Oil and a Weak Euro

The German economy is experiencing a strong upturn driven by unexpected expansive impulses, especially the falling oil price and the sharp depreciation of the euro. Gross domestic product is expected to increase by 2.1 percent this year. The 68 percent projection interval ranges from 1.1 percent to 2.8 percent. Consumption is the driving force behind the upturn. The rest of the euro area is also expected to produce slightly positive impulses, meaning that international trade will contribute to growth. The pace of growth is only expected to slow slightly in the year ahead. The euro’s depreciation will continue to stimulate the economy, while the positive effects of the lower oil price are expected to fade. Public budgets will show significant surpluses of over twenty billion euros in 2015 and 2016 respectively. In view of large structural surpluses, the time is ripe to make the income tax rate more performance-oriented – especially for small and medium-sized companies.

15 April 2015

Digitization of the Music and Film Industries: Despite Weak Sales, an Increase in New Releases - Copyright Protection Having Only a Minor Effect

Study conducted by DIW subsidiary DIW Econ examines whether copyright encourages innovation - technological development primarily responsible for the increasing number of new releases

Sales are going down, the number of new releases is going up: Although music industry revenues have plummeted by more than half since 2000, fresh content is still being released. Even in the film industry, the growth of sales and the number of new releases seem to be moving in opposite directions. Whether stricter copyright laws lead to an increase in the amount of new movie and music content being released was the subject of an analytical study conducted by Anselm Mattes and Yann Girard of DIW Econ, the consulting company of the German Institute for Economic Research (DIW Berlin), and Christian Handke of the University of Rotterdam for the Commission of Experts for Research and Innovation. The conclusion: "A clear effect was not detected. In theory, weaker copyright protection leads to a decreasing supply of creative works, but this effect is not playing out in real life - due to, among other reasons, the low costs of digital development and distribution, which means that more and more amateurs are also putting out creative content on the Internet,“ explained Mattes.

1 April 2015

Individuals in need of long-term care are heavily dependent on public transfer payments

Few assets in comparison to the rest of the population—those living alone are particularly affected

So-called “care households”—that is, households in which a person over the age of 60 and in need of long-term care resides—have similar household incomes to “non-care households,” in which no care-dependent person lives. But care-dependent individuals are more heavily dependent on public transfers; furthermore their assets are considerably less than those of individuals who do not require care. In particular, care households in which a care-dependent person lives alone have relatively meager financial resources—yet they make up over 40 percent of all care households. These are the key findings of a recent study by the German Institute for Economic Research (DIW Berlin) based on its long-term Socio-Economic Panel (SOEP) survey. "The greater reliance on public transfer payments carries risks for future generations, because the pension levels are going to decrease in the future," says DIW pension expert Johannes Geyer, who studied the income and assets situation of care-dependent individuals in private households and compared it with that of the rest of the population aged 60 and over.

25 March 2015

ECB bond-buying program is not a universal weapon against deflation — Coordinated monetary, fiscal, and structural policies are imperative

DIW Berlin examined the preconditions and probable effects of the quantitative easing in the euro area, and compared it to similar programs in other countries. The bottom line: Although there is heavy pressure on the ECB to take action, monetary policy should not remain isolated.

According to the German Institute for Economic Research (DIW Berlin), the European Central Bank’s (ECB) asset purchase program alone is not enough to avert the risk of deflation in the euro area and end the crisis. The study concluded that "there is heavy pressure on the ECB to take action. But monetary policy measures should not remain isolated. We need monetary, fiscal, and structural policies that are coordinated and aligned with sustainable growth in the entire euro area.“ To assess the chances of success of the ECB's program, DIW experts Kerstin Bernoth, Philipp König, Carolin Raab, and Marcel Fratzscher analyzed the current inflation developments, as well as some of their underlying causes in the euro area, and compared the ECB’s program with similar programs in the United States and Great Britain. Moreover, even after a detailed examination of the various transmission channels of such a measure, the precise impact of the ECB's program was, however, difficult to assess. According to the study’s authors: "With its quantitative easing, the ECB is venturing into uncharted territory."

20 March 2015

The Gender Pay Gap in leadership positions in the private sector: Women earned roughly 22 percent less than men in 2013

Although it has decreased slightly, the pay gap between women and men remains at a high level: In 2013, the gross salary of women employed full-time in leadership positions in the private sector was roughly 22 percent, or one-fifth, of the gross salary of men in such positions. In 2012, the so-called Gender Pay Gap stood at 24 percent; in 2002, it stood at 26 percent. These calculations are based on data from the long-term study conducted by the Socio-Economic Panel (SOEP) at the German Institute for Economic Research (DIW Berlin) on the occasion of Equal Pay Day on March 20. "Discrimination against women in the labor market, along with the pressures they face in terms of reconciling family obligations with their professional lives, are important reasons why the gender pay gap in our society urgently needs to be corrected,” said Elke Holst, DIW’s Research Director for Gender Studies. The pay gap between women and men employed in full-time positions stood, in terms of gross hourly earnings, at 17 percent in 2013, according to data from the Federal Statistical Office in 2013.

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