Newsletter May 2022

On 16 and 17 May 2022, around 80 energy and environmental economists from Germany and abroad participated in the tenth Mannheim Conference on Energy and the Environment at ZEW Mannheim. For two days, international researchers discussed various topics of energy, climate and environmental economics. This year, the conference focused on energy efficiency, electricity markets, behavioural economic instruments and CO₂ pricing.

At its meeting on 18 May 2022, the board of the ZEW – Sponsors’ Association for Science and Practice decided to fund two scientific projects at ZEW. The board met for the first time under the chairmanship of Dr. Ralph Rheinboldt and with additional members: With now nine company representatives on the board, the Sponsors’ Association continues to expand its regional outreach and diversity and is a reflection of the outstanding companies in the Rhine-Neckar metropolitan region.

This year, 8 May, Victory in Europe Day, celebrating the end of the Second World War, was more symbolic than ever. The Russian invasion of Ukraine triggered a serious humanitarian crisis. The consequences of the war are being felt around the world. But what impact does the war in Ukraine have on the economy? This was discussed by U.S. Consul General Norman Thatcher Scharpf and ZEW President Professor Achim Wambach on 10 May 2022 as part of the digital event series #ZEWlive. The event was moderated by journalist Jessica Sturmberg.

How do demographic change and climate change affect financial markets and their actors? In what ways do they influence financial decision-making, pensions, interest rates, and even the architecture and regulation of financial markets and institutions? To explore these questions, ZEW Mannheim organised a conference on “Ageing and Sustainable Finance” from 6 to 8 April 2022.

After the economic experts had significantly adjusted their forecasts in the previous month, this month they only see the need to adjust their projections more strongly with regard to inflation. What is rather unusual is the wide range of forecasts. This is the result of the business cycle tableaus by ZEW Mannheim and the German daily newspaper, Börsen-Zeitung.

It is undisputed that Germany has some catching up to do in terms of digitalisation. Particularly in digital key technologies and the digital transformation of the health care system, the Federal Republic cannot keep up with other countries, criticise the members of the Expert Commission on Research and Innovation (EFI) in their Annual Report 2022.

On 28 April 2022, Professor Irene Bertschek, head of the ZEW Research Department “Digital Economy” and member of the EFI Expert Commission, and Dr. Anna Christmann, Commissioner for the Digital Industry and Start-ups of the Federal Ministry of Economic Affairs and Climate Action, discussed the measures that the government coalition parties envisage with regard to digitalisation as part of the ZEW event series "First-Hand Information on Economic Policy”.

The use of artificial intelligence (AI) in firms in the German economy is developing very dynamically. In 2021, around one in ten firms in Germany used AI technology, almost twice as many as in 2019. Almost all firms collaborate with third parties, although the nature of the collaboration varies greatly between them. As a rule, the higher a firm’s AI maturity level, the less it needs to rely on external competences in this area. These are the results of a study by ZEW Mannheim on behalf of the Federal Ministry for Economic Affairs and Climate Action. The study looks at the role of collaborations with third parties and the necessary internal prerequisites to be able to use AI more effectively in firms.

ZEW economist Dr. Madeline Werthschulte received an award for her outstanding dissertation in environmental and resource economics. Every year, the European Association of Environmental and Resource Economists (EAERE) honours the three best doctoral theses in this field to promote academic innovation. The young researcher has been working at ZEW Mannheim since 2020. Using behavioural economics approaches, she makes an important contribution in the areas of energy and mobility.

The democratisation of the GDR after the fall of the Berlin Wall in 1989 has had different effects on opponents and supporters of the GDR’s political regime. Former opponents – protesters for the Peaceful Revolution in 1989 and 1990 – are significantly happier with the new democratic system and the free-market economy after the fall of the Berlin Wall than they were before. Former supporters of the old system, however, report lower life satisfaction after the fall of the Wall. This is shown by a recent study by ZEW Mannheim.

The ZEW Indicator of Economic Sentiment for Germany recorded an increase in the current May 2022 survey, rising 6.7 points to a new reading of minus 34.3 points. The assessment of the economic situation in Germany has worsened again in the current survey. The corresponding indicator dropped 5.7 points to a new level of minus 36.5 points. This is the third decrease of the indicator since the start of the war in Ukraine. The expectations and assessments of the economic situation continue to point to a deterioration of the German economy during the next six months.

The Volksbank Weinheim Stiftung and ZEW Mannheim have given the “Future of the Working World” research award 2021 to Dr. Jan Kinne. In his work, Kinne demonstrates that with the help of artificial intelligence (AI), company website contents can be evaluated online with high-frequency and in a fully automated manner. Currently, such searches are mainly done manually by specialised companies, i.e. by humans. He applies this method to analyse, for example, the innovation activity of companies and the impact of the COVID-19 pandemic on businesses.

The EU eastward enlargements represent the largest ever expansion of European labour markets, which have opened up to more than 102 million Eastern Europeans as a result of the EU’s fundamental right to free movement of workers. 18 years after the first enlargement, ZEW economist Dr. Katrin Sommerfeld takes stock in the latest episode of the #ZEWPodcast ‘Wirtschaft · Forschung · Debatten’/‘Economy · Research · Debates’. She also explains how Germany can continue to benefit from Eastern European workers in the future.

Due to demographic change, Germany is increasingly developing into a so-called “gerontocracy”. A reform lowering the voting age to 16 is supposed to counteract this. A recent study by ZEW Mannheim examines the question of whether such a reform is ambitious enough to anchor future-oriented interests more strongly in current politics. The study suggests that lowering the voting age does little to change a central limitation of democracy: If voters care only about their narrow interests, then policies will tend to be strongly shaped by the present and, in this case, an ageing society.

Intergenerational altruism among voters should be encouraged and more investments should be made to improve voters’ education about long-term policy challenges.

Germany heavily depends on workers from other EU countries. As a result of the EU’s free movement of workers, the number of immigrant workers has more than quadrupled: in 2020, 1.3 million Eastern Europeans were working in Germany subject to social insurance contributions. Mainly, they worked in the postal and warehousing sectors, as drivers and in cleaning. Most of them pay into the German social security system, while employment as mini-jobbers and postings play an increasingly minor role among Eastern Europeans.

In addition, Eastern Europeans work disproportionately often in occupational fields with a shortage of skilled workers, which is why they tend to contribute to relieving the tight German labour market. This is the result of a recent expert brief by ZEW Mannheim, which looks at the consequences of the free movement of workers from Central and Eastern Europe for the German labour market.

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This issue contains a Focus on M&A with the following articles:

Zareh Asatryan
Representing the Future in Aging Societies: Policy Implications of the Voting Age Reform in Germany

Olivier Bos and Tom Truyts
Entry in First-price Auctions with Signaling

Dietrich Earnhart, Robert Germeshausen, and Kathrine von Graevenitz
Effects of Information-Based Regulation on Financial Outcomes: Evidence From the European Union’s Public Emission Registry

Melanie Arntz, Cäcilia Lipowski, Guido Neidhöfer, and Ulrich Zierahn
Computers as Stepping Stones? Technological Change and Equality of Labor Market Opportunities

Yasemin Karamik and Kathrine von Graevenit
Gone with the Wind: The Effect of Air Pollution on Crime – Evidence from Germany

Katia Gallegos Torres, Katrin Sommerfeld, and Julia Bartel
18 Jahre EU-Osterweiterung: Wo Osteuropäer/innen in Deutschland arbeiten (18 Years of EU Enlargement: Where Eastern Europeans Work in Germany)

Thomas Niebel
Der Beitrag der Investitionen in Informations- und Kommunikationstechnologien zum Produktivitätswachstum in Deutschland (How Investment in Information and Communication Technologies Contributes to Productivity Growth in Germany)

Due to the ongoing COVID-19 pandemic, the following event details may be subject to change. The current status of the events can be found in the ZEW Events Calendar. If you have any questions, please don’t hesitate to contact our event team at event@zew.de.

Speaker: Martin Nybom (Institute for Evaluation of Labour Market and Education Policy (IFAU), Uppsala, Sweden)
Location of the event: ZEW Mannheim

Speaker: Claudio Costanzo (Université libre de Bruxelles (ULB), Belgium)
Location of the event: ZEW Mannheim

Speaker: Mar Reguant (Northwestern University, Evanston, USA)
Location of the event: Online

Location of the event: ZEW Mannheim

Speaker: Rodrigo Carril (Universitat Pompeu Fabra, Barcelona, Spain)
Location of the event: ZEW Mannheim

Speaker: Keun Lee (Seoul National University, South Korea)
Location of the event: ZEW Mannheim

Speaker: Mats Köster (Central European University, Vienna, Austria)
Location of the event: ZEW Mannheim

Speakers: Eve Caroli (Université Dauphine, Paris, France), Christian Dustmann (University College London, United Kingdom, CReaM, and IAB), Klarita Gërxhani (European University Institute, Florence, Italy), and Albrecht Glitz (Universitat Pompeu Fabra, Barcelona, Spain)
Location of the event: ZEW Mannheim

Speaker: Adhurim Haxhimusa (University of Applied Sciences of the Grisons, Chur, Switzerland)
Location of the event: Online

Speakers: Fiona M. Scott Morton (Yale School of Management, New Haven, USA) and Alessandro Acquisti (Carnegie Mellon University, Pittsburgh, USA)
Location of the event: ZEW Mannheim

Picture Credits: press release of 27.05.2022: RS-Studios, news article of 20.05.2022: Erich Dichiser EDM, press release of 17.05.2022: iStockphoto.com/CrazyD, news article of 12.05.2022: AdobeStock_313443687, press release of 09.05.2022: Marcus Schwetasch, press release of 03.05.2022: Melinda Nagy | stock.adobe.com
All further pictures: ©ZEW