DIW Weekly Report

German Economy: Slowdown in Sight

Compared to last year, the German economy is weakening noticeably. Orders from abroad are decreasing and domestic companies are holding back on investments. However, capacity utilization remains high—also because the government will boost the incomes of private households next year. However, above all, incomes are rising noticeably due to the positive situation in the labor market: the unemployment ...

The Global Economy and the Euro Area: Increased Uncertainty Is Dampening Growth

The political conditions for growth are currently dominated by increased uncertainty; this is particularly weighing on investment activity and slowing down the global economy. DIW Berlin is lowering its forecast slightly for this year and the next to 4.1 percent and 3.9 percent, respectively. However, global expansion appears to remain intact. In developed economies, primarily the good labor market ...

The German Economy Is Slowing down Somewhat: Editorial

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A Stabilization Fund Can Make the Euro Area More Crisis-Proof

Reorganizing European fiscal policy is a main topic in current reform considerations. In particular, the creation of a European stabilization mechanism is being discussed. This study examines the macroeconomic effects of a stabilization fund, the economic consequences of which are analyzed in an equilibrium model. The model shows that a stabilization fund reduces economic fluctuations and is thus a ...

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Upward and downward Social Mobility Probabilities Have Converged for Men and Women

This study investigates professional social mobility, i.e., changes in one’s occupational status compared to that of their parents. It uses data from the German Socio-Economic Panel (Sozio-oekonomisches Panel, SOEP) on middle-aged, western Germans who were born between 1939 and 1971. On average, social status relative to parents has increased (absolute social mobility). However, looking at how positions ...

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Income Distribution in Germany: Real Income on the Rise since 1991 but More People with Low Incomes

Between 1991 and 2015, the real disposable, needs-adjusted income of persons in private households in Germany rose by 15 percent on average. The majority of the population has benefited from the growth in real income, but the groups at the lower end of the income distribution have not. Inequality in both market and disposable needs-adjusted household income has remained high. These are the findings ...

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Mandatory Day Care for Preschool Children Would Not Be an Effective Solution in Targeting Particular Children

In Germany, around 94 percent of children between the ages of three and six attend a day care center. Regarding the remaining six percent, many experts have speculated that children, primarily those from socio-economically disadvantaged households, do not use day care. Based on data from the Socio-Economic Panel (SOEP) and the Families in Germany survey (FiD), the present study is one of the first ...

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Risk Aversion and Other Factors Determine Income Redistribution Preferences

The amount of redistribution people favor depends on socioeconomic factors and their views on fairness. This study, based on a representative survey conducted in Sweden, confirms earlier results: Higher incomes are correlated with wanting less redistribution, women are more in favor of redistribution than men on average, and older people favor it more than younger people. People’s views on fairness ...

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Social Services: A Rapidly Growing Economic Sector

The social services sector has experienced growth at a far above-average pace in the past, and employment has even accelerated since the middle of the past decade. This is due to a strong increase in demand for this sector's services as a result of an aging society and from increasing tasks to solve problems in families. The influx of refugees has also affected demand. Almost everywhere in the EU, ...

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Household Consumption and Savings Rate Depend Strongly on Employment Status, Income, and Age

On what and to what extent private households in Germany spend money varies significantly depending on employment status, income, and age. As this study based on the most current official sample survey of income and expenditure from 2013 shows, unemployed households on average spend over half of their income on basic needs such as living and food expenses while unemployed people living alone spend ...

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German and Euro Area Economies Will Benefit from a U.S. Interest Rate Hike in the Short Term

To accompany the economic upturn in the U.S., the Federal Reserve Bank has been raising its benchmark interest rate incrementally. In an increasingly globalized world in which the American economy plays a key role, an action like this has spillover effects on the international level. Based on a dynamic factor model, the present study shows that the member states of the euro area—Germany in particular—can ...

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