Aims and Research Activities New York ~ 8 H ~ 4.5 H ~ 1 H

www.zew.eu/en

Aims and Research Activities New York ~ 8 h ~ 4.5 h ~ 1 h

London ~ 5 h ~ 1.5 h ~ 1 h

Brussels ~ 4 h Cologne ~ 1.5 h

~ 4 h

~ 0.5 h

Strasbourg Paris ~ 1.5 h ~ 3.5 h ~ 0.5 h ~ 1 h

Munich ~ 3 h

~ 2 h Zurich ~ 3.15 h Rome ~ 2 h

How to get to ZEW

■ by train From the ICE directly to ZEW: It is just a 5 minutes walk from the Parking in the under ground central station to ZEW. Thus, arriving by public transportation car park of the Central Station Limited par king in the ZEW building is convenient.

■ by plane The Mannheim airport offers flights between Mannheim/Berlin Driving on Bismarckstraße the approach to the ZEW is signposted and Mannheim/Hamburg. Further information at www.cirrus-world.de.

■ by car For visitors arriving by car, limited parking is available in our underground car park. Please reserve a space at the reception desk in time.

You will find further information and directions at www.zew.eu/en »Contact«.

How to contact us Correspondence may be addressed to: ZEW Information and Communication department Zentrum für Europäische Wirtschaftsforschung GmbH (ZEW) P.O. Box 10 34 43 · 68034 Mannheim · Germany (Centre for European Economic Research) Phone: +49/(0)621/1235-01 · Fax: +49/(0)621/1235-224 L 7, 1 · 68161 Mannheim · Germany E-mail: [email protected]

Further information on ZEW activities can be found on our website: www.zew.eu/en

Imprint ZEW Aims and Research Activities

Publisher: Zentrum für Europäische Wirtschafts- forschung GmbH (ZEW) Mannheim (Centre for European Economic Research) L 7, 1 . 68161 Mannheim . Germany

Postal address: P.O. Box 10 34 43 · 68034 Mannheim · Germany Phone: +49/(0)621/1235-01 Fax: +49/(0)621/1235-224 E-mail: [email protected] Internet: www.zew.eu/en

Board of Directors: Prof. Dr. Dr. h.c. mult. Wolfgang Franz, President Science and Research Thomas Kohl, Director Business and Administration

Contact for press and public relations: Gunter Grittmann, Phon: +49/(0)621/1235-132, E-mail: [email protected] Katrin Voß, Phone: +49/(0)621/1235-103, E-mail: [email protected]

Editor: Romy Weiland

Layout and make-up: Media Design, ZEW

Photos: Erich Dichiser (17) Susanne Dockendorff (1) GES (1) Yvonne Lupp (1) Katrin Schleife (1) Daniela Schreuer (1) Roger J. Schwarz (1) WGL (1) Privat (1) Aims and Research Activities

Table of contents

About ZEW ...... 1

Board of Directors ...... 4

Organisational Structure ...... 5

Mission Statement ...... 7

The Research and Service Departments: Core Areas of Work ...... 15

International Finance and Financial Management ...... 16

Labour Markets, Human Resources and Social Policy ...... 17

Industrial Economics and International Management ...... 18

Corporate Taxation and Public Finance ...... 19

Environmental and Resource Economics, Environmental Management ...... 20

Research Group “Information and Communication Technologies” ...... 22

Service Department “Information and Communication” ...... 22

Activities of the Research Departments ...... 23

Research Department “International Finance and Financial Management” ...... 25

Selected Research Projects ...... 29

Selected Publications ...... 30

Selected Presentations ...... 30

Research Department “Labour Markets, Human Resources and Social Policy” ...... 31

Selected Research Projects ...... 34

Selected Publications ...... 35

Selected Presentations ...... 36

Research Department “Industrial Economics and International Management” ...... 37

Selected Research Projects ...... 40

Selected Publications ...... 42

Selected Presentations ...... 42

Research Department “Corporate Taxation and Public Finance” ...... 43

Selected Research Projects ...... 46

Selected Publications ...... 47

Selected Presentations ...... 48 Research Department “Environmental and Resource Economics, Environmental Management” ...... 49

Selected Research Projects ...... 53

Selected Publications ...... 55

Selected Presentations ...... 55

Research Group “Information and Communication Technologies” ...... 57

Selected Research Projects ...... 60

Selected Publications ...... 61

Selected Presentations ...... 61

Research Group “Growth and Business Cycle Analyses” ...... 63

Databases ...... 64

Conferences and Workshops ...... 65

ZEW Doctoral Studies Network and ZEW Visiting Researchers Programme . . . . . 67

Activities of the Service Departments ...... 69

Information and Communication ...... 71

Knowledge Transfer & Qualification Programmes ...... 75

Organisation, Personnel and Finance ...... 77 About ZEW Aims and Research Activities

About ZEW

Within merely 15 years since its foundation, ZEW fer. The institute focuses on decision-makers in has moved up into the ranks of national and inter- politics, economics, and administration, scientists national leading economic research institutes. Its in the national and international arena, as well as outstanding research has established ZEW as a com- the interested public. Regular interview surveys on petent peer in the scientific community and as a the situation of financial markets and business- highly demanded provider of economic counselling related service providers as well as large-scale among German federal and state ministries and the annual studies on technological competitiveness European Commission. of and innovation activities in the economy are As an economic research institute with an em- representative of the different types of topical phasis on applied empirical research preferably in information provided by ZEW. the fields of microeconomics and microeconomet- ZEW takes a predominantly microeconomic and rics, ZEW is host to a highly research-intensive en- microeconometric research approach and closely vironment and a team of excellent and devoted relies upon pooled resources with other scientific young researchers. Main research topics are labour disciplines, whenever the respective issue requires economics, human resources, international finance, such. In this context, the research institute distin- industrial organisation and regulation economics, guishes itself, inter alia, in the analysis of interna- environmental economics, taxation, and public tionally comparative questions in the European con- finance. Moreover, issues in research in education, text and in the creation of databases on individual economics of information and telecommunication firms which are eminently important as a basis for technologies, and innovation behaviour are inves- scientific research. In addition, ZEW provides exter- tigated. Our research comprises both economic and nal scientists with excerpts of selected data for the management research. Much as its name suggests, purpose of their research. ZEW especially focuses on the aspects of European integration and is particularly interested in promis- ZEW is subdivided into the following research areas: ing research questions, analyses, and research ■ International Finance and methods which may prove viable for economic Financial Management; policy and strategic management. ■ Labour Markets, Human Resources ZEW is a non-profit economic research institute and Social Policy; and was founded in 1990 on the initiative of the ■ Industrial Economics and government of the state of Baden-Wuerttemberg, International Management; trade and industry, and Mannheim University. ■ Corporate Taxation and Public Finance; In April 1991, the institute took up work and has ■ Environmental and Resource Economics, expanded rapidly since then. The outstanding qual- Environmental Management; ity of the research work conducted at the institute ■ Information and Communication Technologies was confirmed by the Science Council (Wissen- (research group); schaftsrat, an advisory body to the Federal Govern- ■ Growth and Business Cycle Analyses ment) on the occasion of the evaluation of ZEW in (research group). 1998 and further officially documented by admission of ZEW to Federal Government and Laender Funding Although microeconomic and microeconometric (“Blue List”) by January 1, 2005. At the same time, research approaches are dominant at ZEW, each ZEW became a member institute of the “Leibniz- ZEW research department always takes the macro- Gemeinschaft”. economic environment into consideration as well. ZEW’s objective is to carry out economic re- On this account, the research group “Growth and search, economic counselling, and knowledge trans- Business Cycle Analyses” was established in 2005,

1 Aims and Research Activities About ZEW

which consists of macroeconomically inclined for ZEW research. Research professors are profes- researchers from different research departments. sors from various international universities working The team is mainly focused on three tasks: to quar- as project managers at ZEW and, thus, continu- terly publish “ZEW Wachstums- und Konjunktur- ously contribute new ideas and scientific insights analysen”, to be the contact for the press and pub- into the institute’s research work. lic relations office with respect to questions con- ZEW has always accorded high priority to further cerning macroeconomic issues, and to coordinate developments of the qualification of its staff. There- cross-departmental macroeconomic research fore, the institute has increased the support it gives cooperatives. to those participating in university-based doctoral A new research area “Empirical Competition Poli- programmes by initiating the ZEW Doctoral Studies cy” was introduced in 2006 and is in the process of Network (ZEW DocNet) and by concluding coopera- being established. It is intended to address question agreements with the Universities of Mannheim, tions of firm concentration and regulation. As various Constance, and St. Gallen. Against this background, industries have been experiencing deregulation or ZEW provides young researchers with the opportu- privatisation throughout recent years, it seems nec- nity of a scientifically challenging, problem-oriented essary to put much more emphasis on a scientific involvement in research projects combined with a evaluation of these developments. Particularly in sound professional development to build on for the area of energy supply and telecommunications, future careers in the fields of science, business, a change of market structures was observed. Accord- public administration, or organisations. An expan- ingly, these areas are the first to be investigated con- sion of the ZEW DocNet, by cooperating with doctoral cerning whether economic policy objectives were at- programmes of universities in the EU member states, tained or whether further actions are demanded. is envisioned for the future. In the light of this, ZEW’s Evaluations in annual intervals ensure the qual- role similar to a Graduate School of Economics ity of the work performed in the research fields becomes evident. and its orientation towards the institute’s research A further intensification of the institute’s programme. The evaluations are carried out by involvement of international scholars in its research ZEW’s Scientific Advisory Council, which is com- activities is now launched by the ZEW Visiting Re- posed of renowned German and international sci- searchers Programme. Suitable candidates are in- entists as well as of executives from firms and pub- vited for visiting periods of at least several weeks at lic institutions. ZEW to pursue leading research with ZEW scientists The institute closely cooperates with quite a at the fore of international scientific excellence. number of partners and particularly with universi- ZEW communicates its research results to com- ties and scientific research institutes in Europe panies, politicians, scientists, and the public via and the US. ZEW is, thus, part of a tight national the media, the Internet, and with different publica- and international research network. Visiting aca- tions. ZEW publishes an international book series – demics at ZEW and scientific workshops with ZEW Economic Studies – and magazines, such as national and international participants enhance ZEWnews English edition, that are nationally and the creation of networks. The annual ZEW Summer internationally distributed. In addition, the research Workshop particularly aims at improving qualifi- institute communicates its know-how by offering cations of young economists. We especially bene- scientifically sound seminars for qualified national fit from a close cooperation with Mannheim Uni- and international personnel and executives. versity including an integrated doctoral studies As an extension to our long-established month- programme and joint appointments of ZEW’s ly Financial Market Report, ZEW started a Financial research department heads. Moreover, ZEW’s pres- Market Report Switzerland in cooperation with the ident is full professor at Mannheim Faculty of Eco- Swiss bank “Credit Suisse”. The report – which is nomics. The institution of “research professors” similar to its counterpart for Germany – contains and permanent visiting scholars is vitally important the results and analysis of the Financial Market Sur-

2 About ZEW Aims and Research Activities

vey Switzerland (a survey of financial market ex- The budget of ZEW amounts to around 14 million perts) and has been published monthly since July € (in 2006) and is financed both by the federal 2006. The aim of the Swiss survey is to develop in- government as well as the state government of dicators both for Switzerland’s general economic Baden-Wuerttemberg (approx. 60 percent) and climate as well as for the Swiss services sector. An funded projects raised by ZEW. Institutions that extension of financial market tests to other EU coun- commission ZEW to do research work for them in- tries are at the planning stage. clude the European Commission, federal ministries, Professional trainings and seminars are impor- firms, private organisations, and, to a considerable tant for ZEW’s knowledge transfer. That way, amount, science foundations, such as the German research results and method competences of the Science Foundation (Deutsche Forschungsgemein- research areas can reach science, economy, and schaft, DFG). politics. Many specialists, executives as well as Funding by the state enables ZEW to carry out business managers have already profited from ZEW’s more general research and provide researchers with qualification programmes. The international orien- sufficient means to achieve higher qualifications. tation of ZEW’s seminars is evident as they are of- Valuable additional funding by the “Club of ZEW fered both in Zurich and Brussels. Friends and Sponsors” (Förderkreis Wissenschaft As of 2006, about 140 people are permanently und Praxis am ZEW e.V.), which mostly consists of employed at ZEW; two thirds among them are sci- entrepreneurs from the Rhine-Neckar region, entists. Their work is supported by about 100 student is gratefully acknowledged as well. research assistants and other people who are em- In the following sections, each ZEW department ployed on a temporary basis. Moreover, ZEW is grate- gives a more detailed overview on its aims and ful for, and proud of, the engagement of a number of scopes. We hope that you will benefit from our research professors who, in addition to their uni- research and would like to cordially invite you versity affiliation, direct research projects at ZEW and to visit our website to obtain an updated research very actively give ZEW their backing. agenda. Please feel free to contact us at any time.

Mannheim, July 2007

Prof. Dr. Dr. h.c. mult. Wolfgang Franz, Thomas Kohl, President Science and Research Director Business and Administration

3 Aims and Research Activities Board of Directors

Board of Directors

Prof. Dr. Dr. h.c. mult. Wolfgang Franz Thomas Kohl President Director Science and Research Business and Administration Phone +49/(0)621/1235-100, -101 Phone +49/(0)621/1235-111, -112 Fax +49 (0)621/1235-222 Fax +49 (0)621/1235-222 E-mail [email protected] E-mail [email protected]

Secretary’s office: Andrea Hüneke-Zindl Secretary’s office: Ingrid Rahm Phone +49/(0)621/1235-101 Phone +49/(0)621/1235-112 Fax +49 (0)621/1235-222 Fax +49 (0)621/1235-222 E-mail [email protected] E-mail [email protected]

4 Organisational Structure Aims and Research Activities

Organisational Structure

Shareholder: Supervisory Board State of Baden-Wuerttemberg Chairman: Minister G. Stratthaus

Board of Directors Förderkreis Wissenschaft und Praxis Scientiﬁc Advisory Council Prof. Dr. Dr. h.c. mult. am ZEW e.V. Chairman: Prof. Dr. F. Buttler Wolfgang Franz Thomas Kohl (Club of ZEW Friends and Sponsors) President Director Chairman: Dr. Dr. P. Bettermann

Research

Research Department Research Department Research Department Research Department Research Department International Labour Markets, Industrial Corporate Environmental Finance and Human Resources Economics Taxation and and Resource Financial and Social and International Public Finance Economics, Management Policy Management Environmental Management

Research Group Research Group Information and Growth and Communication Business Cycle Technologies Analyses

Service

Knowledge Transfer & Information and Administration Qualiﬁcation Programmes Communication

5 Aims and Research Activities 2006 Organisational Structure

Contact Persons

RESEARCH

■ Research Department International Finance and E-mail [email protected] Financial Management Head of Dept.: Dr. Michael Schröder ■ Research Department Environmental and Phone +49/(0)621/1235-140, -142 Resource Economics, Environmental Management E-mail [email protected] Head of Dept.: Dr. Andreas Löschel Phone +49/(0)621/1235-200, -210 ■ Research Department Labour Markets, E-mail [email protected] Human Resources and Social Policy Head of Dept.: Dr. Holger Bonin (from Oct 1, 2007) ■ Research Group Information and Communication Phone +49/(0)621/1235-151, -131 Technologies E-mail [email protected] Head of Group: Dr. Irene Bertschek Phone +49/(0)621/1235-178, -360 ■ Research Department Industrial Economics and E-mail [email protected] International Management Head of Dept.: Dr. Georg Licht ■ Research Group Growth and Business Cycle Analyses Phone +49/(0)621/1235-177, -194, -197 Head of Group: Prof. Dr. Dr. h.c. mult. Wolfgang Franz, E-mail [email protected] Phone +49/(0)621/1235-100, -101 E-mail [email protected] ■ Research Department Corporate Taxation and Public Finance Head of Dept.: Dr. Friedrich Heinemann Phone +49/(0)621/1235-149, -142

SERVICE

■ Information and Communication ■ Knowledge Transfer & Qualification Programmes Information Services and Public Relations Barbara Hey Gunter Grittmann Phone +49/(0)621/1235-244, -240 Phone +49/(0)621/1235-132 E-mail [email protected] E-mail [email protected] ■ Personnel EU Office and Research Contracts Doris Brettar RA Shalini Saxena, LL.M. Phone +49/(0)621/1235-250 Phone +49/(0)621/1235-355 E-mail [email protected] E-mail [email protected]

6 Mission Statement Aims and Research Activities

Mission Statement

Basics ternationally oriented knowledge via seminars and other forms of advanced training to partners from The Centre for European Economic Research within the corporate, associations, and academic (ZEW) regards itself as an applied economic research sector as well as from governmental institutions. institute, which feels constrained to empirical eco- Apart from ZEW’s specific profile primarily focusing nomic research as well as to economic counselling, on microeconomic and microeconometric aspects, to the education of young researchers, and to knowl- this knowledge transfer distinguishes ZEW from edge transfer. other economic research institutions. In this respect, the monitoring and progress of sophisticated academic standards plays a prominent role and is the reason why ZEW is actively Main Objectives participating within a national and international network of university research and training. This These rather basic thoughts can be classified under networking takes on various forms: ZEW carries out the following objectives: joint appointments of its research department (i) ZEW performs applied empirical economic heads with universities; furthermore, ZEW receives research on a highly sophisticated level in valuable support from renowned research profes- accordance with international standards, sors, who play an active part in the institute’s which is also underlined by the number of our research activities; the institute is integrated in publications in distinguished scientific jour- postgraduate university programmes and has fur- nals. The integration of university research, thermore initiated an individual network to in- e.g., in form of designated research profes- creasingly promote postgraduates; it facilitates sors and visiting scholars working at ZEW, has further intensive training for its staff in form of formed valuable support to the institute. In “sabbaticals” for completing dissertations, habili- this respect, not only a high scientific standard tation theses (postdoctoral qualification), and ac- is of importance but also the establishment of ademic publications in leading economic journals. a clearly defined, unmistakable profile as well At last, ZEW has established a “Visiting Researchers as the development of innovative scientific Programme” for extended guest visits of particularly and economic research areas. international scholars. (ii) ZEW conducts qualifying postgraduate training The integration of ZEW in the “scientific commu- of its staff. A significant part of this education nity” and the resulting research results as well as the is the provision of sabbaticals for the sole pur- training of postgraduates in the field of applied and pose of research. An increased integration in problem-oriented empirical economic research sig- postgraduate university programmes, partic- nificantly contribute to ZEW earnings. All of these ularly with the universities of Mannheim, Con- components are financed by ZEW’s basic funding, stance, and St. Gallen (ZEW DocNet), addi- and their results are made available to the public. tionally aims at reaching this goal far better in However, in spite of the references to academic the future. research mentioned above, ZEW is not a university (iii) ZEW will continue its high standard of eco- institute. On the one hand, it additionally runs a nomic counselling. In doing so, the institute scientifically well-funded, economic counselling, will frame and adjust its focuses according to which is capable of appropriately reacting to short- economic necessities. That does not only in- notice requests on behalf of our clients, e.g., those volve economic aspects of a medium-term active within the European Union or the national view but also the ability to competently react economic policy. On the other hand, it transfers in- to current counselling needs on short notice.

7 Aims and Research Activities Mission Statement

(iv) ZEW will continue to further extend and focus its ■ observe and, as appropriate, to formatively knowledge transfer to corporations, associa- complement the economic impact of new infor- tions, and governmental institutions, including mation and communication technologies on the the academic sector, by appropriately conveying job market, on innovation activities, and on ZEW knowledge and research results and its market structures. bordering fields to the participants of our pro- This topical feature of the research profile is fessional training programmes. Moreover, new supplemented by a methodical aspect: training courses both in Brussels and in Zurich ■ In regard to theory, ZEW’s activities are predom- allow for ZEW’s international orientation. inantly orientated towards a microeconomic and, in terms of empiricism, microeconometric perspective. Microeconometrically and empiri- Research Profile cally based simulation models are complementarily applied to analyse the macroeconomic An ascertainment of the main objectives will effects on political measures. initially be presented in form of a coherent and ■ Therefore, macroeconomics is by no means independent research profile of the ZEW. It is ignored but rather based on supply side and characterised by the pivotal field of research decision theory foundations relating to growth analysis. “Microeconomics of functional markets in the ■ In view of international locational competition, . European context” particularly in the EU region, the research ought Its primary focus is on the investigation of which to consider the European scope as far as possi- economic incentives have to be offered by econom- ble due to economic decisions being increasing- ic policy in form of basic conditions in international ly made on supranational levels. In addition, the and particularly European locational competition in development of other (EU) economies ought to order to: be taken into consideration. ■ promote the creation of new jobs on the output ■ Economists are not the only experts consulted markets, to support the balancing of supply and for analysing various questions posed within the demand on the job market, and to secure the analyses. The expertise of business economists, efficiency of job market policies; industrial engineers, natural scientists as well as ■ consolidate the integration and stability of in- lawyers is vital and an inherent part of ZEW’s ternational financial markets in the financial scientific research, i.e. ZEW follows an interdis- services sector, the supply of venture capital for ciplinary, methodical direction. businesses, and the decision making for private In the following, this outline of ZEW’s research pro- households regarding investments; file is to be illustrated in greater detail, whereas fur- ■ achieve the objectives of a sustainable econom- ther specifications, which distinguish ZEW from oth- ic development with the scarce resource “envi- er economic research institutes and university ronment” on the market for economic goods; institutions, are also paid attention to. ■ promote the advancement of innovation activities and, thus, of technological performance with the help of appropriate research and technology Specification of Activities policies and to effectively influence start-ups in a pro-competitive market; In detail, the following nine specifications create ■ provide for an internationally competitive cor- a distinctive, consistent profile at large. porate tax burden, for adequate fiscal competition in a federal state structure, and to assume Research objective responsibility for government debts all on a 1. In accordance with its foundation agreement, national level; and ZEW is to analyse those challenges for the econ-

8 Mission Statement Aims and Research Activities

omy and economic policy which result from the nologies”, whose founding was made possible European integration in the context of increasing by a Landesstiftung Baden-Wuerttemberg start- internationalisation of the economy. Therefore, up financing. ZEW’s scientific activities focus on aspects con- 2. The methodical emphasis in the areas of micro- cerning the European Single Market, the realised economics and microeconometrics which have and further planned expansion of EU and the so far been rather successful is to be maintained European Monetary Union, and its chances and and further developed as ZEW trademark. It challenges for the labour market, the corporate seems justified to claim that ZEW plays a leading dynamics, and innovative ability. Issues of tax role in respect to the microeconometric review of harmonisation and tax competition as well as new or advanced microeconomic theories in both aspects of a competition of social security sys- the areas of industrial economics and public tems in respect to the European Single Market finance or of international taxation and labour and their relevance for corporate decisions add market as well as environmental economics. The up to ZEW’s research interest. Finally, issues on international comparison of effective tax burden national and international environmentalism of companies and of qualified employees on the gain in importance with regard to the discussion one hand and the evaluation of labour market of sustainable economic policies, which deals policies on the other hand are but two exam- with the quantification of potential conflicts ples. To analyse macroeconomic effects on between economic, social, and environmental political measures, ZEW employs, among other policy goals. things, a system of applied general equilibrium The outcome of this is a first common denomi- models, with which politically induced structur- nator of research departments and the research al changes as well as efficiency and distribution group for the research objective’s orientating to effects can be systematically quantified. It is re- international and particularly European aspects. alised that conflicts of objectives between ZEW’s The challenges of the globalisation of markets microeconometric and European research orien- are dealt with in detail by five research sectors, tation may be likely, if the access to comparable which serve as the basis for structuring the five individual level data sets for the European coun- research departments: tries is restricted. Whenever possible, such data ■ International Finance and Financial sets are meanwhile used for comparative Euro- Management; pean research in cooperation with international ■ Labour Markets, Human Resources and partners. Moreover, ZEW methodically works on Social Policy; a double-track basis in the sense that European ■ Industrial Economics and International issues are taken account of by analysing them on Management; a sectoral or macroeconomic level. Personal or ■ Corporate Taxation and Public Finance; corporate-related individual level data sets are ■ Environmental and Resource Economics, prerequisite for theory elaboration and econo- Environmental Management. metrical review on a microeconomic level. Here, not only the expansion of databases for the pur- The rapid spreading and eminent significance pose of replying to new economic issues is es- of modern information and communication tech- sential but also the maintenance of the existing nologies were hardly predictable in the early databases. Time-consuming and, in part, inno- 1990s, when ZEW was founded. Even though vative work is related to such a mission that gen- the “New Economy” has considerably lost its erally exceeds the capacities of a university re- brilliance, the technologies mentioned have search institute due to its long-ranging character. thoroughly reshaped economical processes. Experience shows that university databases are This research sector is covered by the research often become obsolete and, therefore, lose in group “Information and Communication Tech- scientific value. Consequently, it ought to be em-

9 Aims and Research Activities Mission Statement

phasised even more that ZEW enables national important economic determinants is revealed. and international scientists to access its data- The ZEW Indicator of Economic Sentiment de- bases and, thereby, offers significant assistance rived from that survey has become one of the to university research. These are revenues as most well-known leading indicators for eco- well that result from basic funding. nomic development in Germany and the euro zone. Moreover, ZEW has conducted the month- 3. Notwithstanding the focusing on microeconom- ly Financial Market Report Switzerland in ic and microeconometric basic principles, a collaboration with Credit Suisse since June range of problems necessitates taking the macro- 2006. Financial market reports for further coun- economic level into account as well. Herein, the tries are at the planning stage. connection to ZEW’s microeconomically oriented To sum it up: Complementing the microeconom- emphasis is perfectly obvious, as is shown in ic and the microeconometric main focus with a the model of growth analyses. Germany’s current macroeconomic perspective guarantees – and growth path is too low; in order to reach greater this is to be greatly emphasised – well-balanced goals, it is essential for economic measures to be and sophisticated economic counselling. Cer- implemented on the supply side. Microeconom- tainly: Microeconomics primarily examines the ics primarily provides the appropriate framework incentives which cause certain actions on be- for analyses, e.g., in the form of economics of half of investors, consumers, or employers and skill formation or innovation and the labour mar- employees, and thus, offers starting points for ket research. The growth path, in turn, deter- economic policy in order to influence these mines the macroeconomic production potential, behaviours. But: Confining the analysis on a genuinely macroeconomic factor. Depending microeconomic statements alone carries the risk on the observation period, production potential of pushing the effects of macroeconomic can be running at substandard, normal, or full processes to the back of one’s mind – also in capacity. These different degrees of utilisation regard to microeconomic decisions. On the reflect economic fluctuations, which can, in turn, other hand: A purely microeconomically based influence the behaviour of the supply and de- funding would carry the great risk of disregarding mand side – and, therefore, possibly economic the important and potentially decisive supply growth. Hence, distinguishing between growth side of an economy. Therefore, ZEW pursues a and economic activity or between demand and pluralism of methods with an emphasis on supply economics is superficial and can be mis- microeconomic standards. leading concerning economic policy suggestions. Consequently, ZEW has expanded its expertise Multidisciplinarity in the field of macroeconomics and intends to 4. In regard to methodology, the multi-disciplinar- pay even more regard to the analysis of eco- ity of research projects is of further concern to nomic activity and growth. Specifically for this ZEW. For that reason, at ZEW economists and reason, the research group “Growth and Busi- business economists, industrial engineers and ness Cycle Analyses” was established for the business information technology specialists, as purpose of addressing issues within this sub- well as natural scientists in ecology projects ject area. It is composed of representatives from closely work together. Legal competence in the various research departments and concentrates field of labour law, for example, is procured by ZEW’s macroeconomic expertise. ZEW contin- collaborating with acknowledged scholars. The ues to have a share in business cycle analysis cooperation with “Heidelberg Academy of Sci- by its monthly release of the ZEW Financial Mar- ences and Humanities” has already been estab- ket Test. Through this survey of financial ana- lished through an interdisciplinary research proj- lysts questioned, the assessment of the cur- ect. The collaboration with Heidelberg Universi- rent as well as the expected development of ty has even been strengthened by the mutual

10 Mission Statement Aims and Research Activities

appointment of the head of ZEW research de- Economic counselling partment “Environmental and Resource Eco- 5. Apart from applied empirical economical re- nomics, Environmental Management” to a pro- search, ZEW’s second essential activity includes fessorship to Heidelberg University. In addition, economic counselling at a high scientific stan- cooperation with other national and international dard. It is carried out in various ways: by pro- scholars and research institutes are of great sig- cessing research assignments on behalf of the nificance; without such a research network nei- EU, the federal as well as the state ministries, as- ther sophisticated research nor the application sociations, and corporations; by active partici- for project funding at the EU Commission, for ex- pation at hearings of the German Bundestag or ample, would be possible. the parties; or by advising politicians at discus- Great importance is additionally attached to the sion rounds, conferences, and symposia. collaboration of the individual research depart- The main emphasis of economic counselling is ments in form of joint projects in order to bene- put on research projects for which an invitation fit from various competences inherent to the to tender is issued, even Europe-wide, by the EU various research departments for the purpose and national ministries through a competitive of receiving third-party funding. In these joint process. The competition with numerous national projects as well as in the research group “Growth as well as international research institutes and Business Cycle Analyses”, project teams involved by that represents an initial guarantor from various departments work together. Tem- for a high quality standard. Cooperation with porary teams, in which scientists from various distinguished scientists of national and interna- departments participate, represent an additional universities acts as a second element of tional cooperation between the research areas. quality assurance. Thirdly, numerous research One specific example is the project team “Em- projects are subject to an evaluation, e.g., by pirical Competition Policy”, which was engaged presenting research results to external scholars in investigating the same issues the newly es- at scientific conferences organised by the client. tablished research area under the same name is Fourth, research work produces dissertations, now analysing. Another project team was de- publications in renowned economic journals, signing the conception for the research group and presentations at academic events. “Information and Communication Technologies” Being a fundamental part of economic coun- (ICT) established afterwards. These temporary selling, the processing of third-party-funded proj- project teams exemplify the organisation of work ects, thus, fulfils not only the genuine purpose of processes at ZEW, which is characterised by a scientific research institutes – this is what high degree of collaboration on the one hand distinguishes them from university institutes – and by great flexibility on the other. For one but is an integral part of the research work carried thing: With the ICT research group it becomes out at ZEW. apparent how new research fields are success- In other words, there is neither a conflict fully elicited by acknowledged staff in close between research and project work nor between cooperation with the senior management and the staff’s own scientific work and the process- are then investigated as to whether an integra- ing of his/her third-party-funded projects since tion into ZEW’s research work is possible. For an- ZEW is managing projects with utmost scientific other thing: Project teams allow for an efficient professionalism. After all, this scientific demand and competent reaction to newly arising com- is what differentiates research institutes from prehensive problems while the organisational consulting firms. framework of the individual research depart- Economic counselling is not only posing a chal- ments represents a scientific nucleus for the lenge in respect of quality assurance. ZEW has to staff in form of a “competence centre” which be capable of appropriately reacting to short-no- feeds into the work of the project teams. tice counselling requests by economic policy due

11 Aims and Research Activities Mission Statement

to current developments. Appropriate capacities tence and specifics have to be the focus, i.e. the are to be provided for that purpose. It is perfect- research areas will mainly bear the responsibili- ly obvious that this cannot be carried out for the ty in terms of content. In this context, the refer- wide range of potential needs for economic coun- ence to the knowledge reflux from corporations selling under the financial framework given. On back to ZEW seems not to be that insignificant the one hand, this is in favour of concentrating on owing not only to expert seminars and specific a range of selected areas as they are identified by training programmes for firms and institutions or- ZEW research areas and groups. On the other ganised by the service department “Knowledge hand, however, such a classification must not be Transfer and Qualification Programmes” but also carried out too restrictively. Sophisticated eco- owing to the “Förderkreis Wissenschaft und Prax- nomic counselling always takes the effects on is at the ZEW”. other economic actors – such as labour market demanders and innovators – into consideration Promotion of young researchers when analysing certain issues, e.g., ecological 7. All mentioned specifics of ZEW’s orientation re- measures. Analogous holds true for the link quire high academic qualification on the staff’s between micro- and macroeconomics already part. Initially, a vital prerequisite for this is the discussed. ZEW fulfils these two aims – necessary opening up of employment possibilities at ZEW focus on the one hand and required wide range to young researchers for which a fairly high pro- on the other – by employing intensive collabora- portion of temporary employment contracts is tion between individual research areas and de- essential. In this respect, ZEW leads the way partments. Regarded in that light, ZEW’s “value” among German research institutes. Temporary in total exceeds the sum of the “values” derived employment contracts form the requirement for from each individual department. ZEW’s man- knowledge transfer into practice by well-trained agement emphatically encourages such collabo- young researchers. In addition, ZEW evidently ration by granting precedence to joint projects supports the compatibility of profession and when allocating its own resources to projects. family as well as the equalisation of men and women. Knowledge transfer Furthermore, scientific qualification upgrade in 6. A further ZEW specific, which additionally acts as form of doctoral studies and habilitation theses, a bridge between the individual research areas, active participation at national as well as inter- is represented by the knowledge transfer to eco- national scientific events, and internal ZEW qual- nomic policy, corporations, and the public. In ification programmes are all part of a scheme this respect, not only communicating the re- which is to secure and increase scientific quali- search results to appropriate target groups is of ty standards. importance, also current issues can be efficient- With the help of the “Qualification Fund”, ZEW ly taken up and commented on from a scientific releases staff from work for an appropriate perspective on short notice – a concern that is period of time for further intensive training, e.g., not classically an integral part of a university infor writing dissertations or habilitation theses. stitute’s intentions. This is not only required by ZEW’s demand to This concern corresponds to ZEW’s foundation offer high-standard scientific counselling but agreement, according to which a contribution in also by the competition for excellent university counselling is made to economy and politics by graduates, who often have been offered means of knowledge transfer through qualifica- employment by universities and companies. tion programmes, and according to which infor- Moreover, ZEW annually organises an interna- mation and communication services are to tionally oriented ZEW summer workshop at which inform the public and to support scientific leading scientists and Ph.D. students from all research. Within these activities, ZEW’s compe- over the world intensively discuss a specified

12 Mission Statement Aims and Research Activities

research topic. The applications regularly exceed most efficiently informed by contributions of ZEW the capacity of such a workshop so that a tough staff to the media, particularly by newspaper ar- selection process, which ZEW employees them- ticles, and by ZEWnews, ZEW Financial Market selves have to equally undergo, is consequently Report, ZEW Wachstums- und Konjunkturanaly- necessary. For several years now, the most out- sen (analysis of economic activity and growth), standing paper of a young scholar has been con- its reports on firm foundations (Gründungsre- ferred the Heinz Koenig Young Scholar Award, port), industrial sectors (Branchenreport), and which comprises of a residential fellowship at the the power market (Energiemarktreport), as well ZEW for several weeks in addition to prize mon- as by book publications on ZEW’s research re- ey worth 5.000 € sponsored by corporations. sults. In this process, it is guaranteed that the The 2004 laureate was recently approved to pub- service department “Information and Communi- lish an article in a “Top-A” journal. cation” receives all relevant information from the research departments. In addition, lectures Integration in university research are given by leading personalities from politics 8. The link to university research is primarily carried and economics at the series of lectures entitled out through joint appointments of ZEW research “Wirtschaftspolitik aus erster Hand” (“First-Hand department heads and the ZEW president, through Economic Policy Issues”) as well as at the annu- research professors, and through mostly project- al, full-day ZEW Economic Forum held during the based research cooperation with external scien- summer months. Furthermore, several times a tists. In addition, ZEW staff publishes articles in year ZEW organises “Mannheimer Wirtschafts- academic journals and books (primarily involving und Währungsgespräche” (“Mannheim Talks on a peer review process) and actively participates in Monetary Issues”) in cooperation with Mannheim scientific conferences in Germany as well as University, VWA Mannheim, and local banks. In around the world. The contact to universities is ad- Brussels, ZEW predominantly presents its results ditionally strengthened by ZEW’s integration into of the latest research and its standpoint on cur- postgraduate programmes with its own pro- rent economic policies to the members of the EU grammes “ZEW DocNet” and “ZEW Visiting Commission; in Berlin similar procedures are Researchers Programme” as well as university carried out. courses taught by ZEW staff. Besides, the project-based employment of student assistants and interns and their inherent training in the field of Rather than a summary empirical economic research aims for the same goal. Regarding this as an integral part of their Which profits are generated by ZEW’s basic con- training, ZEW introduces its Ph.D. students to the figuration financed by tax money or – to put it more field of applied empirical economic research. mundanely – what does ZEW do with the taxpayers’ money? The profits – previous and future ones – can Public relations be specified in five points: 9. The existing transmission channels are to be re- (i) Research in the field of “Microeconomics of tained: public relations through appearances on functional markets in the European context” is the Internet including topical platforms, press promoted, namely in form of doctoral stud- releases and articles published by ZEW staff, as ies, habilitation theses, and articles in inter- well as ZEW’s own generation of informational nationally distinguished journals. services dealing with topics that come within (ii) ZEW educates young scholars in empirical eco- the limits of ZEW’s fields of activity. Also, expert nomic research, whereby this promotion of seminars and specific training programmes for young researchers partly goes hand-in-hand firms and institutions are to be a tool with which with university doctorate programmes and to attract attention to ZEW’s work. The public is postgraduate education.

13 Aims and Research Activities Mission Statement

(iii) ZEW holds its capacities for a topical demand stantial model systems and databases. for economic counselling on a high academ- Allowing for privacy terms, university staff is ic standard. It informs the public about cur- given access to these databases. rently significant economic and political top- (v) ZEW offers a comprehensive range of qualifi- ics in connection with a quantitatively ori- cation programmes to corporations, associa- ented opinion. tions, and governmental institutions including (iv) University research is supported by the build- the academic sector, which is significantly at- ing-up and continued maintenance of sub- tributed to the competence of ZEW staff.

14 The Research and Service Departments: Core Areas of Work

Aims and Research Activities Aims and Research Activities The Research and Service Departments: Core Areas of Work

International Finance and Financial Management

Head of the research ■ International Financial Markets and department: European Integration Dr. Michael Schröder ■ Integration of European capital markets Phone: +49/(0)621/1235-140 ■ Regulation and supervision of E-mail: [email protected] financial markets ■ Systemic risk in the banking market ■ Financial markets and real economy

■ Money and Currency Deputy Head of the research department: ■ Monetary policy: Concepts and strategic issues Dr. Peter Westerheide ■ Implementation of monetary policy Phone: +49/(0)621/1235-146 E-mail: [email protected] ■ Capital Market Analysis ■ ZEW Financial Market Survey ■ Expectation formation and behavioural finance ■ Asset pricing ■ Socially responsible investments

■ Investments and Financial Services ■ Saving behaviour and wealth of private households ■ Financing of old-age provisions ■ Banks, insurances, investment funds ■ Real estate investment and financing

■ Corporate Finance ■ Small business finance ■ Venture capital, private equity, and going public ■ Credit markets ■ Mergers and acquisitions

16 The Research and Service Departments: Core Areas of Work Aims and Research Activities

Labour Markets, Human Resources and Social Policy

Head of the research ■ Labour Markets department: ■ Evaluation of active labour market policy Dr. Holger Bonin ■ Analysis of labour demand and labour supply (from Oct 1, 2007) ■ Institutional analysis of the labour market Phone: +49/(0)621/1235-151 ■ Gender research E-mail: [email protected] ■ Economics of Skill Formation ■ Costs and benefits of investments in skill formation Deputy Head of the research department: ■ Skill formation, labour market success and PD Dr. Bernhard Boockmann wage distribution Phone: +49/(0)621/1235-156 ■ Family, participation and E-mail: [email protected] attainment in education ■ General education and vocational training, mobility

■ Human Resources ■ Education and vocational training ■ Individual and social returns to human capital investment ■ Company-specific payment systems ■ Productivity effects of company-specific work organisation and flexible working time models

■ Social Policy ■ Labour market effects of social security ■ Distributional effects and fiscal costs of social security ■ Social security system and demographic change ■ Experimental analysis of reform options for long-term care insurance

17 Aims and Research Activities The Research and Service Departments: Core Areas of Work

Industrial Economics and International Management

Head of the research ■ Innovation Research and Innovation Policy department: ■ Determinants of innovation activities Dr. Georg Licht at the firm level Phone: +49/(0)621/1235-177 ■ Innovation indicators E-mail: [email protected] ■ Innovation and technology policies ■ Internationalisation of innovation activities ■ Research infrastructure and technology transfer ■ Evaluation of research and technology policies

Deputy Head of the research department: ■ Firm Dynamics and Market Development Jürgen Egeln ■ Start-ups Phone: +49/(0)621/1235-176 ■ Firm mortality and survival E-mail: [email protected] ■ Determinants of firm growth ■ Evaluation of start-up funding ■ Start-up financing and venture capital

■ Empirical Competition Policy ■ Analysis of mergers ■ M&A market trends ■ Corporate integration and market performance ■ Regulation of network-based industries

■ International Corporate Strategies ■ Global sourcing ■ Market and industry analyses ■ Market introduction of innovative products

■ Firm-Level Databases ■ Mannheim Enterprise Panel (MUP) ■ ZEW Start-Up Panels ■ ZEW Start-Up Panel Austria ■ Mannheim Innovation Panels for the manufacturing sector and mining as well as service sector (MIP, MIP-DL)

18 The Research and Service Departments: Core Areas of Work Aims and Research Activities

Corporate Taxation and Public Finance

Head of the research ■ Corporate Taxation and Analysis of department: Tax Locations Dr. Friedrich Heinemann ■ Harmonisation of company taxation in Europe Phone: +49/(0)621/1235-149 ■ Reform of company taxation in Germany E-mail: [email protected] ■ International comparison of effective corporate tax burdens ■ Tax burden on high-skilled labour and expatriates ■ Tax databases

■ Fiscal Competition and Federalism ■ Decision-making in fiscal competition ■ Incentive effects of German fiscal equalisation systems ■ EU fiscal constitution ■ Effects of tax legislation on investment, innovation and choice of location ■ Non-profit sector

■ Fiscal Policy and Growth in the EU ■ Empirical economics of growth ■ Fiscal determinants of potential growth ■ Determinants of structural reforms ■ Sustainability of public debt

19 Aims and Research Activities The Research and Service Departments: Core Areas of Work

Environmental and Resource Economics, Environmental Management

Head of the research ■ Innovation and Sustainable Development department: ■ Specification of rules, indicators, and Dr. Andreas Löschel strategies for sustainable economic activities Phone: +49/(0)621/1235-200 ■ Analysis of determinants and economic E-mail: [email protected] impacts of environmental innovations ■ Analysis of environmental innovation systems

■ Energy Economics ■ National and European regulatory framework Deputy Head of the research department: for the energy markets Dr. Klaus Rennings ■ Regulation of grid-bound energy industries Phone: +49/(0)621/1235-207 ■ Renewable energy and external costs E-mail: [email protected] ■ Transport and Mobility ■ Ecological and socio-economic effects of transport systems ■ Concepts for a sustainable development in the transport sector ■ Volume of traffic and means of transportation used in freight traffic

■ International Environmental and Resource Policies ■ Analysis of institutions for international environmental and resource policies ■ Analysis of trade-offs between international trade and environmental policies ■ International climate and resource policy

■ Macroeconomic Analysis of Environmentally Relevant Policies ■ Design of environmental and economic policy tools ■ Quantification of trade-offs between ecological and economic goals on macroeconomic and sectoral levels ■ Impact analysis of national, international, and global policy measures

20 The Research and Service Departments: Core Areas of Work Aims and Research Activities

Research Group “Information and Communication Technologies“

Head of the research group: ■ ICT Sector and Diffusion of ICT Dr. Irene Bertschek ■ IT and media sector Phone: +49/(0)621/1235-178 ■ Service providers of the information society E-mail: [email protected] ■ Diffusion of ICT

■ ICT and the Labour Market ■ Workplace organisation ■ Qualification and wage structure ■ Age structure of employees ■ Training and further education ■ Pre-professional education

■ ICT, Competition and Firm Strategies ■ Productivity and innovation ■ IT outsourcing and IT consulting ■ Internationalisation ■ Competition of economic aspects

21 Aims and Research Activities The Research and Service Departments: Core Areas of Work

Service Department “Information and Communication”

■ Information services and public relations Contact person: ■ Media design and distribution Gunter Grittmann ■ Library Phone: +49/(0)621/1235-132 E-mail: [email protected]

■ EU Office and research contracts Contact person: RA Shalini Saxena, LL.M. Phone: +49/(0)621/1235-355 E-mail: [email protected]

Service Department “Knowledge Transfer & Qualification Programmes”

■ Expert seminars Contact person: ■ Specific training programmes for Barbara Hey enterprises and institutions Phone: +49/(0)621/1235-244 E-mail: [email protected]

22 Activities of the Research Departments

Aims and Research Activities

International Finance and Financial Management Aims and Research Activities

Research Department “International Finance and Financial Management”

The research department is concerned with the households’ saving and wealth, allocation is central, economic analysis of international financial mar- especially in terms of investment decisions regard- kets and the behaviour of central groups of eco- ing old-age provisions. A new focus is put on real es- nomic agents, such as private households, institu- tate investment markets and real estate financing. tional investors, and firms in these markets. Finan- cial market-related issues are being viewed both from the macroeconomic as well as the microeco- Research Area “International Financial Markets nomic perspective. Most of the research projects and European Integration” are empirically oriented and methodically charac- terized by the use of sophisticated tools from the ar- In this research area, macroeconomic issues are eas of time series as well as by panel econometrics. investigated in the context of international financial Central to both research areas “International Fi- markets. Particular significance, thereby, inheres in nancial Markets and European Integration” and the analysis of the effects from the European inte- “Money and Currency” are macroeconomic issues in gration process. Accordingly, the projects cover the context of the European integration process. cross-border capital market integration, European Accordingly, the projects pertain to the European financial market supervision, and the stability of monetary policy, capital market integration in financial markets. In recent years, various projects Europe, and specifically the stability of financial were conducted concerning the topics mentioned markets as well as reforms of supervision and above with their results providing a solid basis for fu- regulation. Another important field of research ture work. Changes of the research issues primarily constitutes the interdependencies of capital result from the political advancement of the EU en- markets and real economy. largement and the gradual elimination of obstacles The research area “Capital Market Analysis” par- to a single European market. ticularly focuses on the theoretical and empirical investigation of asset pricing and the analysis of Capital market integration expectations. An important basis for studies on ex- In the area of European capital market integra- pectation formation is provided by the monthly “ZEW tion, a reputation has been established during the Financial Market Survey” delivering original expec- past years based on several projects with a wide Eu- tation data on international financial markets and on ropean impact (for the European Financial Services important fundamental factors, such as the busi- Roundtable and the British Investment Management ness cycle and inflation. Moreover, the widely ac- Association). The studies concentrated on those knowledged “ZEW Indicator of Economic Sentiment” markets that, even in today’s EU single market, still for the German economy is based on this survey. show substantial integration deficits. In a project for The two research areas “Investments and Finan- the European Commission on current trends in the cial Services” and “Corporate Finance” deal with fi- European asset management industry, we have built nancial market-related decisions of firms, financial up a Europe-wide database covering the relevant service providers, and private households. Venture issues of asset management and analysed the major capital and private equity are important topics in the developments in these markets in the EU-25 coun- area of corporate finance. The studies on financial tries. service providers concern the behaviour of banks, insurance companies, investment funds, private eq- Regulation and supervision uity and venture capital funds, as well as the devel- A new project sponsored by the German Science opment of the credit market. In the domain of private Foundation analyses regulatory differences in the EU

25 Aims and Research Activities International Finance and Financial Management

From left to right: Heidi Schielke, Andreas Schrimpf, Tereza Tykvová, Michael Schröder, Sandra Schmidt, Matthias Köhler, Gunnar Lang, Mariela Borell, Wojtek Piaskowski, Waldemar Rotfuß, Katrin Ullrich, Peter Westerheide

and evaluates their consequences for international lected as part of the ZEW Financial Market Survey competition and systemic risk in the banking market. pertaining to inflation as well as short- and long-term interest. Thereby, it is of interest whether there are systematic differences in the expectation formation Research Area “Money and Currency” of particular groups of analysts, which macroeconomic factors influence expectations formation, and At the core of the research work, monetary poli- by what means changes in expectations occur. cy analyses of the European Central Bank and comparisons between the European Central Bank and International comparisons the Federal Reserve currently reside. A second focus of research deals with the implementation of monetary policy in the euro area Inflation expectations and the United States. The analysis particularly fo- The first focus of research is on the relation be- cuses on the effect changes in the operational frame- tween monetary policy and the formation of inflation work have on short-term interest rates. expectations. In this area, transparency and communication policy of central banks play a key role. The different perception of monetary policy deci- Research Area “Capital Market Analysis” sions and explanations by the member states of the EMU as well as by different target groups, like con- In this research area, questions of asset pricing sumers and financial market experts, provide a start- and the functioning of financial markets in general ing point of research. A specific potential for the are investigated. From the multitude of possible re- empirical analysis in this respect bears from the da- search questions, those topics are being preferen- ta on financial market analysts’ expectations col- tially treated that are both interesting from a theo-

26 International Finance and Financial Management Aims and Research Activities

retical point of view as well as pertinent to de- questions of behavioural finance (at present specif- manding empirical investigation. Particular signifi- ically in terms of overconfidence), the analysis of cance is attributed to application-oriented ques- certain influential factors on expectation forma- tions that are relevant for capital market actors and tion (e.g., orientation according to past share price the solution of economic policy problems. The proj- developments), the use of expectations data for ects concentrate on the following topical areas: macroeconomic modelling, as well as the evaluation of expectations as regards their predictive Analysis of asset prices quality. The aim is theory-deduced empirical investigation of the behaviour of asset prices with the aid of econometric methods. The analyses relate to Research Area “Investments and the evaluation of stock indices, the interrelations Financial Services” between stock prices and other financial market variables, as well as the cross-section of expected This research area is concerned with the savings returns. and investment behaviour of private households as Another important field of research is the inves- well as with current developments in the financial tigation of the relationship between sustainable services sector. An important characteristic of this re- management (as regards ecological, social, and eth- search area’s investigations is its empirical, micro- ical criteria) and corporate success. Thereby, inter- economically geared perspective. Therein, the fol- relations are econometrically assessed with firm- lowing topics attain specific weight: specific data. In addition, it is being investigated how fund management of socially responsible in- Old-age provisions and saving behaviour vestments (SRI) is conducted by investment com- This segment focuses on questions of private panies. A new project deals with the asset manage- finance and private-saving behaviour as well as cap- ment of German foundations if investments con- ital-funded old-age provision. The projects concen- centrate on SRI. trate on private savings, private wealth allocation, and their changes over time, which are being ZEW Financial Market Survey analysed based on micro data from the German Fed- The survey in which, at present, about 350 eral Statistical Office’s Income and Expenditure Sur- financial market experts regularly participate has vey and from the German Socio-Economic Panel. In been conducted since the end of 1991. It provides a project concluded in the year 2005, whose results original expectation data regarding the develop- served as input for the federal government’s ment of international capital markets and key fun- national report on poverty and wealth, the assets of damental factors for each 6 months in advance. private households were comprehensively analysed These data serve as the basis for the analysis of ex- and their development observed over time. This pectation formation processes. The internationally work is planned to be continued in further research acknowledged ZEW Indicator of Economic Sentiment projects on income and wealth distribution in Ger- derives from this survey as well. In cooperation with many. Credit Suisse, we now have extended this survey to Switzerland. Financial service providers Here, the research work focuses on the behav- Expectation formation and behavioural finance iour of banks, insurance companies, and invest- The data from the ZEW Financial Market Survey ment funds as well as their product policy. Subject are being used to generate insight into the forma- to a recently concluded project were the determi- tion of expectations, taking especially into account nants of banks’ size of equity and payout ratio with the important role that the heterogeneity of expec- observations particularly centring on savings tation formation plays. Of particular significance are banks. This question was analysed with recourse to

27 Aims and Research Activities International Finance and Financial Management

year-end closing data that was made available in a central focuses. In a DFG-funded project, the be- cooperative framework with Deutsche Bundesbank. haviour of VC funds upon sale of their participating Future research projects will concern, among others, interests on the stock exchange was investigated. In comparative analyses of the costs as well as risk-re- a current project, financed by the German Science turn profiles of insurance and investment products, Foundation (DFG), the role of joint financing of a e.g., in the context of private old-age provision. project by several investors (“syndication”) is being One project in this regard has already been fin- analysed. In another current project, which is being ished analysing the impact of reallocations towards conducted in cooperation with the research de- riskier assets in typical portfolios of different types partment “Industrial Economics and International of households. Management”, the effects of the VC investment on executive turnover in the portfolio companies are Real estate investment and financing analysed. Moreover, the market potential of pri- The research efforts pertaining to the intersec- vate equity and venture capital markets are being tion of real estate and financial markets have been in- investigated and questions of institutional arrange- tensified in the recent past. The research department ments are discussed. In a project on behalf of the has already conducted a research project for the Fed- Federal Ministry of Finance, the framework condi- eral Ministry of Finance regarding the introduction of tions for PE funds in Germany were compared to real estate investment trusts as a new instrument of those of other markets. real estate finance in Germany. In a current project, the integration of owner-occupied housing in the de- Credit markets ferred taxation system of old age provisions is being Various projects deal with the credit supply of analysed based on comprehensive micro-simulation banks, changes to the business processes, and models. Further projects focus on the current state of the framework conditions of the credit market. In a the German mortgage market and on portfolio trans- recently finished project, the influence of equity actions in the European real estate market. market developments on credit supply was investigated.

Research Area “Corporate Finance” Mergers and acquisitions Twice a year, an analysis of current developments This research area investigates various aspects of on worldwide M&A markets is presented in the M&A debt and equity finance. Report, which is published in cooperation with the research department “Industrial Economics and In- Small business finance ternational Management” and Bureau van Dijk Elec- In general, projects concerned with small busi- tronic Publishing (BvDEP). A new research project in ness finance typically deal with the access of small cooperation with the research department men- businesses to equity finance as well as the impact of tioned above is intended to investigate the inter-firm equity capital regulations. These investigations are linkages and intertwining structures inside and often conducted in cooperation with the research de- among companies with respect to the impact of partment “Industrial Economics and International hedge funds. Another new research project aims at Management” using its firm-level databases (e.g., investigating how firm valuation depends on acqui- ZEW Foundation Panels). One of the main issues sition policies and on corporate governance. In par- with respect to small business finance is the analy- ticular, it is to be analysed whether bad governance sis of venture capital financing. makes for poor bidding strategies and poor firm valuation. In a further project, the acquisition strategies Venture capital, private equity, and going public of private equity firms are evaluated. One of the The work on venture capital (VC) and private eq- central topics is the investigation of the role of het- uity (PE) markets forms one of the research area’s erogeneous international syndicates.

28 International Finance and Financial Management Aims and Research Activities

Selected Research Projects complex. The aim of the project was to collect asset management-related data for several EU member ZEW Financial Market Survey states, to analyse the developments affecting this The ZEW Financial Market Survey is a monthly sur- industry, and to develop new indicators. The focus vey that has been conducted among German financial was on indicators that measure the integration and ef- experts since December 1991. A total of about 350 ficiency in the European investment funds business in analysts from banks, insurance companies, and large order to achieve a better understanding of the func- industrial corporations regularly take part. We survey tioning of the market and of current trends which experts working in the finance, research, and macro- could affect the future development of the asset man- economic departments as well as those in the in- agement industry. vestment and securities departments of these com- (http://www.zew.de/project539) panies. The financial experts are specifically surveyed about their expectations concerning trends in eco- The Consequences of Regulation Differentials in the nomic activity, inflation, short- and long-term interest European Banking Market for Market Integration and rates, share prices, and exchange rates in selected Systemic Stability countries (Germany, the United States, Japan, Great Since the introduction of the euro, there has been Britain, France, Italy) and the euro zone. Moreover, the a common monetary policy in Europe. Banks are, how- market experts are asked to assess the earnings po- ever, still subject to national supervision. Although the sition of 13 German industries. International investors EU has implemented minimum harmonisation stan- closely follow ZEW’s expectations for the German dards, significant regulatory differences still exist be- economy (ZEW Indicator of Economic Sentiment) de- tween the EU member states. Following the enlarge- rived from the survey because of their leading indica- ment of the EU to 25 member states, the relevance of tor qualities. Since June 2006, ZEW also carries out the potential differences in the regulation and supervision Financial Market Survey Switzerland in cooperation of banks has increased even more. with Credit Suisse (CS). This survey displays the ex- The objective of this research project is to inves- pectations of Swiss financial experts on six impor- tigate the impact of differences in regulation and su- tant international financial markets. The aim is to de- pervision on bank behaviour (e.g., regulation arbi- velop an indicator for the Swiss economy that is sim- trage), the integration of the financial markets in ilar to the ZEW Indicator of Economic Sentiment. the EU, and the stability of the banking system. (http://www.zew.de/en/publikationen/finanzmarkt Based on our findings, we will draw conclusions report.php3) about the future development of the European reg- (http://www.zew.de/en/publikationen/finanzmarkt ulatory and supervisory framework. reportschweiz/finanzmarktreportschweiz.php) (http://www.zew.de/project549)

Current Trends in the European Asset Management Regulatory and Institutional Framework in Inter- Industry national Comparison – Private Equity and REITs Over the last years, many changes have been tak- The project was concerned with the analysis of the ing place in the asset management industry. Some of institutional and regulatory framework for private eq- them are driven by cost and performance considera- uity (PE) funds and real estate investment trusts tions (e.g., outsourcing, multi-management), by in- (REITs) in an international comparison. In the first part vestors’ demand (e.g., guaranteed products), by as- of the study, we identified factors that are important set managers’ creativity (e.g., certificates, hedge for the successful development of a PE market in Ger- funds), and, of course, by the enhancement of the EU many. The conditions in countries with a well-devel- framework for investment funds, UCITS III (e.g., cross- oped PE market (USA, UK, the Netherlands, and Swe- border funds and open-architecture). As a result, ad- den) have been analysed and compared with the sit- ditional actors have emerged, and asset manage- uation in Germany. Finally, a set of ten recommenda- ment processes and products have become more tions for public policy in Germany have been devel-

29 Aims and Research Activities International Finance and Financial Management

oped. They concentrate on the establishment of Schrimpf, A., M. Schröder, and R. Stehle (2006), favourable conditions for PE investments. Evaluating Conditional Asset Pricing Models for the In the second part of the study, we compared le- German Stock Market, ZEW Discussion Paper No. gal and tax regulations as well as the market devel- 06-43, Mannheim. opment of Real Estate Investment Trust (REITs) and Schröder, M. and M. Schüler (2005), Capital Mar- similar investment vehicles in the US, Canada, Aus- kets and Demography, in: Heise, M. and V. Wieland tralia, Japan, the Netherlands, Belgium, and France. (Eds.), Capital Markets in the Long Term: Demogra- The German real estate investment market is phy, Economic Development and Funded Pension analysed with respect to existing vehicles for indirect Systems, Frankfurt/Main, 45-70. real estate investment, their regulation, taxation, Tykvová, T. (2006), How Do Investment Patterns and their performance. of Independent and Captive Private Equity Funds (http://www.zew.de/project390) Differ? Evidence from Germany, Financial Markets and Portfolio Management (Special Issue: Alternative Legitimacy of a European Constitution – Investments) 20(4), 399-418. Sovereignty and Solidarity Ullrich, Katrin (2005), Comparing the Fed and Results from the preceding interdisciplinary proj- the ECB Using Taylor-Type Rules, Applied Economics ect “The Legitimacy of a European Constitution” in- Quarterly 51(3), 247-266. dicated that the EU finds legitimacy, above all, in the Westerheide, P. (2006), Cointegration of Real benefit generated for the nation states as part of Eu- Estate Stocks and REITs with Common Stocks, Bonds ropean level proceedings. In practice, this idea en- and Consumer Price Inflation – An International forces a certain degree of solidarity among the mem- Comparison, ZEW Discussion Paper No. 06-57, ber states. The failed referendums in the Netherlands Mannheim. and France have shown that this solidarity is increasingly being challenged. This poses questions regarding the shape and extent of solidarity in Europe, questions which, at the same time, are central to the Selected Presentations legitimacy of a unified Europe. The research in this project will, thus, be oriented towards the following Köhler, M. (2005), International Capital Mobility questions: Concerning the problem of legitimacy in a and Current Account Targeting in Central and Eastern union based on the principle of national sovereignty, European Countries, ECB-CFS and Oesterreichische what forms of European solidarity and European so- Nationalbank Conference on European Economic In- cial market economy are required or necessary? What tegration, Vienna. forms of open or mandatory coordination of national Schrimpf, A. (2006), Consumption-Based Asset policies on the supranational level are feasible in Pricing with a Reference Level: New Evidence from these policy areas and under which conditions or by the Cross-Section of Stock Returns, Annual Meeting which mechanisms could those be legitimised? of the Eastern Finance Association, Philadelphia. (http://www.zew.de/project559) Schröder, M. (2006), The Dynamics of Overcon- fidence: Evidence from Stock Market Forecasters, Symposium on Behavioural Finance, European Fi- Selected Publications nancial Management Association, Durham. Tykvová, T. (2006), How Do Investment Patterns Heinemann, F. and K. Ullrich (2006), The Impact of Independent and Captive PE Funds Differ?, EFMA of EMU on Inflation Expectations, Open Economies Annual Conference, Madrid. Review 17(2), 175-195. Ullrich, K. (2006), Introducing Instruments of Kruse, S., M. Meitner, and M. Schröder (2005), On Central Bank Accountability in a Monetary Union, the Pricing of GDP-Linked Financial Products, Ap- International Symposium on Money, Banking and plied Financial Economics 15(16), 1125-1133. Finance, Lille.

30 Labour Markets, Human Resources and Social Policy Aims and Research Activities

Research Department “Labour Markets, Human Resources and Social Policy”

This research department uses modern micro- resources issues, evaluating proposals for social econometric techniques to study labour markets, policy reforms with the help of econometric models, human resources, and social policies by drawing and concomitant research on social experiments. on administrative, enterprise, and other types of The department draws on a number of individual- data. The department works in four specific fields of level data sources. For projects on the evaluation of research: “Labour Markets”, the “Economics of Skill labour market policy, the department’s competence Formation”, “Human Resources”, and “Social Poli- in the use of complex administrative data not previ- cy”. All of them share the microeconomic perspec- ously used for scientific purposes is crucially im- tive of the analysed issues, i.e. the examination of portant. Furthermore, the department is involved in individual behaviour, the empirical approach, and the development of individual-level databases such the application of modern econometric techniques. as the DFG-sponsored Family Panel. Data obtained Furthermore, there is also a focus on the European from field experiments also provide new sources of context. information. Important fields of activity include the evaluation In recent years, the research department has reg- of labour market policies where the department is ularly organised international meetings at ZEW. Be- one of the key players in Germany, the analysis of the sides, researchers from the department played an costs and benefits of investments in pre-school ed- active role in conferences at universities and insti- ucation, representative and case studies of human tutions all over Europe, the United States, and Cana-

From left to right: Johannes Gernandt, Thomas Zwick, Bernhard Boockmann, Christian Göbel, Susanne Steffes, Anja Heinze, Thomas Walter, Alexander Spermann, Stephan L. Thomsen, Markus Clauss, Andrea Altenrenger, Andreas Ammermüller, Nicole Gürtzgen, Henrik Winterhager, Giulia Colombo, Melanie Arntz, Grit Mühler, Michael Maier, Maresa Sprietsma

31 Aims and Research Activities Labour Markets, Human Resources and Social Policy

da. The department has been consulted on issues re- With a large number of individual projects, the related to the German labour market by international search area participates in long-term programmes organisations, such as the IMF and the OECD, by gov- funded by the German Science Foundation (DFG), ernment branches, such as the US Department of the such as the Priority Programmes “Potentials for More Treasury, and by the private sector. Flexibility on Heterogeneous Labour Markets” and “Intimate Relationships and Family Dynamics” and the Researcher Group “Heterogeneous Labour – Research Area “Labour Markets” Positive and Normative Aspects of the Skill Structure of Labour”. These initiatives strengthen collabora- The most important issue in this research area is tion within the community of German-language the phenomenon of unemployment. From a micro- labour market researchers as well as international economic point of view, research is primarily con- and interdisciplinary cooperation. cerned with the reasons for individual transitions be- Most projects of the department are using mi- tween employment, unemployment, and being out of croeconometric methods. Evaluation studies use a the labour force. Many projects in this research area variety of recently established methods in order to evaluate labour market policies, such as training and estimate causal effects, such as extensions of the subsidised employment, but also changes in job statistical matching method and duration analysis. placement, unemployment benefit entitlement, and Besides the well-known parametric methods, the early retirement. The focus is both on the effective- department also develops and uses state-of-the-art ness of these programmes or policies as well as on semi-parametric statistics for specific applications. their costs and benefits for the government and work- Techniques of modelling discrete decisions, econo- ers and employers. Quantitative research in this area metrics of panel data, and quantile regressions be- has become much more important in recent years. To- long to the methodological repertoire of the de- gether with its permanent visiting professors, the department. In addition to the econometric techniques, partment is cooperating with leading experts in this CGE and micro-simulation models are used. field from Europe and the United States. A particular focus of labour market analysis is on individual labour supply. The department examines Research Area “Economics of Skill Formation” factors influencing the participation in the labour market, the mobility of the work force across geo- Public discussion often focuses on serious short- graphic regions as well as across firms, and the role comings in educational institutions and the German of statutory regulation, collective agreements, and school system, which might lead to omissions in the human resource policies given growing employment formation of cognitive skills (e.g., mathematical skills, rates of women and increasing discontinuities in memory capacity). A neglected aspect that will be in- the careers of both men and women. New ap- vestigated in greater detail and future interdiscipli- proaches of the microeconomic theory of house- nary projects point to deficits in non-cognitive skills hold behaviour are considered looking closer at the (such as motivation, persistence, self-regulation, and labour supply in the family context. social integration). Such deficits are often caused by The characteristics of labour market institutions are poverty, physical violence, or neglect in early child- of crucial importance for the amount of unemploy- hood, which in turn might result in school failure, ment. The auctions model of wage determination has youth unemployment as well as disintegration and ex- been dominating empirical research for a long time. clusion tendencies among adolescents. More recently, theories of imperfect competition have Since skill formation over the life cycle and the found widespread application. In much of the de- stock of human capital are central for individual partment’s research, approaches such as models of well-being, wages, and economic growth, the caus- labour market frictions and bargaining models are re- es and consequences of the factors behind skill ac- fined and applied to empirical research questions. quisition will guide the future research agenda. Re-

32 Labour Markets, Human Resources and Social Policy Aims and Research Activities

search activities of the research area include the An important trend in labour organisation is an development of international and interdisciplinary increase in autonomy and participation of non-man- networks on skill formation over the life cycle, both agers. On the basis of representative establishment on cognitive and non-cognitive skills, and specifi- data and in-depth studies in cooperating firms, the cally the economics of early childhood education. department analyses the productivity consequences Joint research activities are planned with the of higher employee participation. Recent research al- Centre for the Economics of Education in London, the so deals with the effects of works councils on es- Central Institute of Mental Health in Mannheim, and tablishments’ wage structure, such as wage differ- the Socio-Economic Panel at the DIW Berlin to im- ences between different qualifications or the gender prove the understanding of deeply-routed motiva- wage gap. A further research topic is the German tional factors and self-regulation in early childhood dual apprenticeship system, which is under strong for these findings. In a joint research project on the pressure because the number of young people seek- economic analysis of pre-school investments in ing apprenticeship training outnumbers the quanti- skills with Nobel Prize laureate James J. Heckman ty of available job offers. To investigate the compa- from Chicago, the nature of the skill multiplier and nies’ demand for apprentices, recent research on the characteristics of the production function of skill this issue focuses on the impact of apprenticeship formation (such as self-productivity) in early child- training intensity on establishment profits. hood will be investigated. For a number of years, our researchers working in On this basis, scientific consultancy is offered to this area have been actively engaged in the inter- decision-makers in the field of training and educa- national Low-Wage Employment Research Network tion policy. Several projects have been undertaken (LoWER) initiated by the European Union. The third on behalf of the European Commission under the LoWER phase, launched in 2006, concentrates on heading of “Education and Wage Inequality in Eu- the uncertain future of the low skilled in a knowl- rope”. A number of other on-going projects investi- edge-based society. The research area also fre- gate educational inequality using PISA and TIMSS quently cooperates with private sector employers. data. These projects often deal with the effects of the Recently, a study for a multinational health care en- educational system, such as the effects of early abil- terprise has been completed which analyses future ity tracking on the educational inequality, as well as developments in the supply of labour market en- other issues of policy concern, such as violence in trants with specific qualifications. In addition, some schools and the composition of the student and strategies how to cope with qualification gaps and teacher population. ageing staff have been developed.

Research Area “Human Resources” Research Area “Social Policy”

Human resources are a key factor for the com- Unemployment benefits and public assistance petitiveness of enterprises. An important future chal- are essential determinants of employment, in par- lenge for human resource management will be the is- ticular for those who are less qualified. Both the sue of ageing employees. It is often feared that old- level and duration of unemployment benefits play a er staff is less productive and flexible. In addition, major role for the emergence of long-term unem- older employees are frequently more costly to employment. High unemployment and public assis- ploy due to mechanisms that automatically increase tance benefit reduction rates decrease the proba- wages with tenure. Hence, wages are an important bility of transition to employment on the primary research topic in this area. Both the decision labour market. The financing of social security sys- whether to retain older employees and whether to tems with taxes and social contributions enlarges hire older workers after a period of unemployment the gap between gross and net wage and, thus, dis- are addressed. torts labour demand and labour supply decisions.

33 Aims and Research Activities Labour Markets, Human Resources and Social Policy

Therefore, social security reforms are of top priority This has brought about major organisational both in academic and public discussion. changes. In most cases, employment offices and Microeconometric models of labour supply, in municipal administrations have established joint connection with the Tax Transfer Model as devel- consortiums in order to support recipients and oped by ZEW, are used in micro-simulations, e.g., for place them into the labour market. However, an the analysis of distributional effects of means-test- experimentation clause allows 69 municipal ad- ed unemployment benefit II. To consider feedback ef- ministrations to compete with the consortiums and fects of reform proposals, a computable general to explore alternative means of reintegration. In equilibrium model, another ZEW development, is this project, the relative success and weakness of used as well. The link between these two models, these two models will be investigated using indi- which is currently developed, will produce a highly vidual-level data from a survey conducted among valuable item in the toolbox of the applied re- 25,000 recipients. searcher. As opposed to the evaluation of individual ac- Demographic change causes drastic effects on all tive labour market programmes and policies, the fo- systems of social security. The effects on nursing cus is on the effectiveness of the entire activation care insurance are still a neglected field of research process as well as on the efficiency of different in- among empirically-oriented economists. Empirical stitutional arrangements within consortiums or mu- research in this area is complicated by a lack of suit- nicipalities. able data sets. Therefore, the development of ap- (http://www.zew.de/project527) propriate micro data sets is necessary for detailed econometric analyses. One opportunity to receive Family Behaviour: Empirical Evidence on very detailed individual data is the evaluation of a Intra-Household Bargaining unique social experiment conducted in several sites The theoretical analysis of family behaviour has in East and West Germany with so-called “matching significantly gained from the latest developments in transfers”, where our department is involved. Pre- economic modelling and contributed to a better un- liminary results from this project were presented at derstanding of intra-family resource allocation. From several international conferences. Furthermore, a methodological as well as an analytical point of long-term care researchers from all over the world view, bargaining models offer an appealing ap- met at ZEW for the first “European Long-Term Care proach to the decision-making process of families. Conference”. Due to the lack of disaggregated information, how- Finally, the reform of basic income has been a hot ever, the empirical implementation of these models topic in Europe for years. We offered our expertise in remains difficult. In this joined project with Ruhr this field to policy-makers in Germany, Switzerland, University Bochum, new data are collected in order and Liechtenstein and participated in numerous to treat the relevant questions related to the eco- workshops, symposia, and hearings to get the pub- nomics of the household in a more satisfying way. lic more informed. Thus, the project tries to close a fundamental gap in the empirical research on the household decision process. The project consists of two parts: The first Selected Research Projects part compares different economic models of family behaviour. The second part of the project concen- Evaluation of the Experimentation Clause in § 6c trates on the formulation of the items. SGB II (Social Security Code) – Comparative Evalu- (http://www.zew.de/project409) ation of the Labour Market Success of the Opting Municipality and Consortium Models Microeconometric Methods for Assessing In a far-ranging reform to German social legis- Heterogeneous Returns to Schooling lation, unemployment and social assistance have Conventional empirical studies on the returns to been joined into a common framework in 2005. schooling assume that the return for an addition-

34 Labour Markets, Human Resources and Social Policy Aims and Research Activities

al year of schooling is the same across individuals. nomic impacts of the new tax-financed benefit (Un- The goal of this project is to relax this assumption employment Benefit II) supplementing previous by developing and applying new microeconometric research, the development of a tax-benefit micro- methods that account for heterogeneous returns simulation model is required in advance. The joint to schooling and identify the causal effects of objective of the project is to enhance the existing schooling. tax-benefit micro-simulation model and to apply it In particular, we would like to identify the im- to a variety of research questions. Moreover, it is al- pact of observable and unobservable factors that so intended to enhance the microeconomic labour determine the returns to schooling. Literature on market model that is integrated within the tax-ben- skill obsolescence of labour yields valuable infor- efit micro-simulation model. Eventually, both mod- mation on the observable heterogeneity of returns els should complement each other to a consistent to human capital investments. Unobservable fac- micro-simulation model. The joint development tors leading to heterogeneous returns to schooling work aims at conducting an ex-ante evaluation of may result from selection processes. Policy meas- the personal income distribution effects and the ures that change the individual’s cost of schooling, expected labour market effects caused by the therefore, lead to a change in the composition of in- merging of UA and SA. dividuals who invest in schooling. Hence, micro- (http://www.zew.de/project496) econometric tools have to be developed that are able to identify the causal effects of these policy measures. The project is part of the joint research Selected Publications group with Constance University on “Heteroge- neous Labour, Positive and Normative Aspects of Beblo, M. and C. Lauer (2004), Do Family Re- the Skill Structure.” sources Matter? Educational Attainment During Tran- (http://www.zew.de/project277) sition in Poland, The Economics of Transition 12(3), 537-558. The Insecure Perspectives of the Low Skilled in the Boeters, S., M. Feil, and N. Gürtzgen (2005), Dis- Knowledge Society crete Working Time Choice in an Applied General The European Low-Wage Employment Research Equilibrium Model, Computational Economics 26 network (LoWER), started in 1996, will continue its (3-4), 1-29. activities until 2007 with a focus on the uncertain po- Boockmann, B. (2006), Participation and Voting sition of the low skilled in societies that are in- in Committees: Evidence from the ILO, Public Choice creasingly functioning on the basis of formal knowl- 126(3-4), 405-427. edge. The work is organised in packages addressing Franz, W. and F. Pfeiffer (2006), Reasons for Wage individual mobility and employer behaviour, house- Rigidity in Germany, LABOUR – Review of Labour hold behaviour and intergenerational transmission, Economics and Industrial Relations 20(2), 255-284. gender and skills, and skills and training. Wilke, R. (2006), Semi-Parametric Estimation of (http://www.zew.de/project389) Consumption-Based Equivalence Scales: The Case of Germany, Journal of Applied Econometrics 21(6), Development of an IAB Micro-Simulation Model 781-802. The Social Code II (SGB II) has been introduced Winterhager, H., A. Heinze, and A. Spermann on January 1, 2005, and governs the merging of (2006), Deregulating Job Placement in Europe: the former Unemployment Assistance (UA) and So- A Microeconometric Evaluation of an Innovative cial Assistance (SA) for able-bodied recipients. Voucher Scheme in Germany, Labour Economics This project originates from the motivation of eval- 13(4), 505-517. uating this policy reform and is conducted in co- Zwick, T. (2006), The Impact of Training Intensi- operation with the Institute of Employment Re- ty on Establishment Productivity, Industrial Rela- search (IAB). In order to analyse the macroeco- tions 45(1), 26-46.

35 Aims and Research Activities Labour Markets, Human Resources and Social Policy

Selected Presentations Pfeiffer, F. (2006), Rising Wage Inequality in Ger- many, European Association of Labour Economics (EALE) Conference, Prague. Boockmann, B. (2006), Fixed-Term Contracts as Spermann, A. (2005), The Targeted Negative In- Sorting Mechanisms: Evidence from Job Durations in come Tax in Practice – Evidence from a Quasi-Ex- West Germany, European Association of Labour Eco- periment, European Economic Association (EEA) An- nomics (EALE) Conference, Prague. nual Conference, Amsterdam. Gürtzgen, N. (2006), Rent-Sharing and Collec- Zwick, T. (2006), High Performance Workplaces tive Bargaining Coverage – Evidence from Linked and Establishment Productivity, British Academy of Employer-Employee Data, European Economic As- Management HRM Special Interest Group Meeting, sociation (EEA) Annual Conference, Vienna. London.

36 Industrial Economics and International Management Aims and Research Activities

Research Department “Industrial Economics and International Management”

The department’s main focus lies on the static oretical foundation in order to resist in the public dis- and dynamic effects of competition among firms. cussion of policy issues. The research results provide This comprises both the allocation of goods and in- national and international institutions with recom- come as well as investments and innovations. In mended procedures for their innovation and com- particular, understanding the determinants of in- petition policy to evaluate and improve economic novative activities, internal and external growth, as competitiveness and to circumvent potential ob- well as firm entry and exit are essential aspects for stacles. assessing the potential and the limits of public pol- The department mainly covers four research areas: icy. Technology and innovation policy are substan- “Innovation Research and Innovation Policy”, “Firm tial research areas within the department. Dynamics and Market Development”, “International Microeconomics and microeconometrics are the Corporate Strategies”, and “Empirical Competition predominant research methods. They serve as in- Policy”. The last-mentioned research area was es- struments in order to analyse research questions on tablished in 2006 and is to be further developed market failure, namely externalities or natural mo- within the next years. This extension of the research nopolies. These issues serve as a starting point for portfolio was motivated by current topics in industri- our research activities. The consultancy for public al policy and competition policy which came along policy demands both sophisticated and robust with the liberalisation process in several industries: methodology which simultaneously requires a the- telecommunications, energy, and transportation. The

From left to right: Christoph Grimpe, Patrick Beschorner, Thorsten Doherr, Helmut Fryges, Sandra Gottschalk, Christian Rammer, Hannes Ullrich, Georg Metzger, Nina Leheyda, Jürgen Moka, Tobias Veith, Tobias Schmidt, Franz Schwiebacher, Kai Hüschelrath, Birgit Aschhoff, Heidrun Förster, Thomas Eckert, Wolfgang Sofka, Anja Schmiele, Bettina Peters, Heide Fier, Mark O. Sellenthin, Martina Lauk, Georg Licht

37 Aims and Research Activities Industrial Economics and International Management

regulation of these industries has developed a strong Research Area “Innovation Research and focus on dynamic efficiency. This comprises the ac- Innovation Policy” cess to and maintenance of essential facilities con- trolled by former state monopolies, which are still The Mannheim Innovation Panel (MIP) is the key dominant firms to this day. Furthermore, innovative element of this research area. It is an annual and rep- performance on competitive markets may be jeopar- resentative survey on innovation activities of Ger- dised by inappropriate merger policy. In the light of man firms. Since 1993, it is realized by ZEW on be- increasingly active private equity firms and multina- half of the German Federal Ministry of Education tionals, the number and volume of merger transac- and Research (BMBF) in cooperation with infas and tions have substantially risen and, therefore, have be- Fraunhofer-ISI. This survey constitutes the German come highly relevant research questions. contribution to the Community Innovation Surveys The research area “Innovation Research and In- (CIS). In 2006, the 14th wave took place of which an novation Policy” aims at analysing in-house process- anonymised version is accessible to external re- es which lead to innovations. Typically, industry- searchers. wide innovation performance is broken down into Furthermore, the annual report on Germany’s determinants of innovative activities on firm level. technological performance is covering several as- These tasks are substantial parts of contractual and pects such as education, science, research, tech- academic research. Inter alia, this covers the evalu- nology, production, innovation, and trade. ZEW reg- ation of public innovation and research policy and ularly contributes to these indicators on higher ed- cooperation among public and private research. This ucation, sectoral innovation, and firm growth. Sev- includes the regulation of markets verifying the close eral projects with closely related research questions relation of the new research area “Empirical Com- cover the econometric evaluation of policy instru- petition Policy” with the established research ar- ments as research aid programmes, efficiency of eas of the department. technology transfer, or sectoral analyses of innova- Analyses on firm exit and entry is the core ele- tion policy instruments on EU25 level. Several proj- ment of the research area “Firm Dynamics and Mar- ects are carried out on behalf of the European Com- ket Development”. This includes the assessment of mission. These tasks include a consultation on op- institutional rules on foundations of firms and bank- timal policy instruments for innovation aid which ruptcy programmes as well. may be financed by specific and limited European in- “International Corporate Strategies” aims at de- vestment programmes. One further step is to eval- veloping instruments that support strategic deci- uate the efficiency of aid programmes and to pro- sions of firms. Such decisions become relevant with pose an appropriate design aiming at increasing respect to suppliers on upstream and customers on the efficiency, precision, and predictability of such downstream markets as well as in M&A decisions. instruments. Consequently, there is a strong interconnection to A key to quantitative analyses on innovation ac- “Empirical Competition Policy”, which focuses on tivities is a database on intellectual property. It is optimal policy in the light of the recent develop- used in combination with micro data in order to ment in business strategies. conduct research projects on the efficiency of the In addition to immediate academic and applied patent system. Both academic and applied research research, all members of the department continu- highly benefit from this database. Projects carried ously work on improving the databases which form out on this topic propose explanations for the patent the backbone of the department. The databases are surge, which was observed in the 1990s. In particu- unique to the department and form the essential in- lar, the strategic use of intellectual property rights is frastructure that is the core of many research proj- broken down into specific motives for patenting. ects both internally and externally, which may be car- This allows for insights in the firms’ patenting strate- ried out by German and international researchers gies as well as in the effect of existing patents on from outside the ZEW. competitors.

38 Industrial Economics and International Management Aims and Research Activities

Inventors are subject to our research activities as dia sector in order to evaluate current developments well. An analysis of their geographical mobility pro- in the software and hardware industries as well as poses explanations for obstacles to firms’ innovative foundations in the high-tech sector. The Anglo-Ger- performance which might be restricted in terms of man Foundation sponsored a project on comparing the availability of highly qualified researchers. One entry and performance in high-tech industries in exemplary result is that researchers tend to go west: Germany and Great Britain. Based on the survey da- Researchers from Eastern Europe or Asia come to ta, we found out that an international business strat- Western Europe while local researchers strive for egy is more important for the success of a firm in a positions in North America. later stage when already well-established rather than at the very beginning. The survival of firms is more probable for firms that carry out R&D. Research Area “Firm Dynamics and Market Development” Research Area “Empirical Competition Policy” The dynamics of an economy is characterised by growth and decline of industries, thus, involving This research area was set up in 2006 and is still foundation of new firms as well as bankruptcy or oth- in the process of being established. Research ques- er types of failure. Many studies on this topic carried tions on market concentration and regulation are ad- out by ZEW rely on a data set which have been set up dressed. As various industries have been experi- in cooperation with Creditreform: the Mannheim En- encing deregulation or privatisation throughout re- terprise Panel (MUP). The core of this database con- cent years, it is a challenging task for the field of eco- sists of a panel with information about 12,000 firms nomics to scientifically evaluate this economic pol- over time. ZEW can access 7.8m data records on icy. Particularly in the area of energy supply and firms in Germany and Austria, which turned into an telecommunications, a change of market structures essential source for firm foundation statistics in was observed. Accordingly, these areas are the first these countries. On behalf of Microsoft, firm foun- to be investigated concerning whether economic dations in high-technology sectors were analysed policy objectives were attained or further actions are both with respect to the qualification of the per- demanded. sons involved in the new firms and to the specifics In the field of market concentration, ZEW pub- of the new firms. Obstacles or supporting instru- lishes the M&A Report in cooperation with the Bu- ments were identified as well, thus, creating an im- reau van Dijk characterising current developments mediate relevance for public policy. on the M&A market. The scope of this cooperation A further research project deals with the per- gives access to a comprehensive database on world- spective of unsuccessful founders. Based on the wide M&A activities. This allows for large scale analy- ZEW Firm Foundation Panel and a survey carried out sis of M&A as well as case studies. Research projects by KfW, one key result is that restarters who have on the effects of a concentration on firm and indus- gained experience in a former independent busi- try innovations are closely related to the established ness tend to be more successful in their business research area “Innovation Research and Innovation than founders who engage in an independent busi- Policy”. ness for the first time. It can be interpreted that the In the area of energy supply, many local and re- learning effect dominates the selection effect and gional public utility companies were acquired by a that failures may be a consequence of the founders’ few dominant electricity producers. This concentra- qualification. tion process is subject to assessment by the Feder- Apart from a comparative study on foundations al Cartel Office (Bundeskartellamt), whose decision in Austria and selected German regions and spin- behavior is empirically investigated. offs from Austrian academic research institutions, Concerning regulation, we will initially concen- another departmental focus lies on the ICT and me- trate on analysing the electricity and telecommuni-

39 Aims and Research Activities Industrial Economics and International Management

cation markets. This is to be taken place in cooper- new ideas, which were gained from foreign sources ation with the research department “Environmental – international cooperation among firms or research and Resource Economics, Environmental Manage- institutions –, were revealed. ment” as well as the research group “Information and Communication Technologies”. In the discussion on the regulation of grid-bound industries, the Research Area “Firm-Level Databases” existence of economies of scale and particularly of network effects is of major significance. This aspect For all research activities of the department, the is treated differently in the various industries such availability of the databases is essential. They con- as energy supply, telecommunication and postal stitute the core infrastructure which is to be kept up- services. One study investigates whether findings in to-date and to be enlarged and adapted subject to the context of regulation of one sector can be current needs. The Mannheim Enterprise Panel, the implemented to other sectors. A synthesis of the ZEW foundation panels for Germany and Austria, two research questions, regulation and market con- and the Mannheim Innovation Panel offer unique da- centration, is to be made the subject of another ta on firm foundations and growth and is most like- study, which will comprise the institutional set-up ly making up the largest data pool on corporate mi- of the electricity market and a welfare economic cro data. In addition, it is possible to combine these assessment. data with indicators for R&D and other business strategies like M&A data from the Bureau van Dijk or patent data of the European Patent Office. Research Area “International The Mannheim Innovation Panel is available Corporate Strategies” throughout ZEW and to external researchers as well – subject to legal secrecy obligations. Specific meth- In close cooperation with the Bureau van Dijk ods for data anonymisation while preserving the (BvDep), an M&A index synthesising the number statistical properties of the data set were developed and volume of worldwide M&A transactions was at ZEW. developed. It is updated on a monthly basis and is part of the M&A report which is published twice a year. A specific focus on investments is given in Selected Research Projects studies on the foundation and financing of biotechnology and ICT companies. Firms entering these Innovation Watch – SYSTEMATIC markets are subject to high risks, and therefore, pri- The “Innovation Watch – SYSTEMATIC” project is vate equity tend to hold a higher share of such aimed at providing policy-makers and stakeholders firms in the foundation phase compared to newly within the sectors with a comprehensive and holis- founded firms in less risky industries. Furthermore, tic understanding of the sectoral innovation per- venture capital financing promotes a faster growth formance and challenges across the EU25 member in the foundation stage compared to traditional states. The fundamental question is to what extent loan financing. These insights result from our and why innovation performance differs across sec- dataset on enterprise foundation and the BIOCOM tors. The project investigates the sectoral innovation database. Biotechnology and the chemical industry performance in specific European sectors. There- play an important role in the Rhine-Neckar Triangle fore, it plays a great role in developing new indica- which was subject of a comparative study on tors and innovation models at the sectoral level. strengths and weaknesses of European metropoli- Moreover, the project goes beyond statistical analy- tan regions. Finally, two dissertations on the im- sis of cross-sector innovation performance and in- portance of global knowledge sourcing for German corporates qualitative analysis. The project will also companies were completed. Based on the MIP, sev- establish innovation panels composed of out- eral determinants of firms’ ability to implement standing sectoral innovation specialists that will

40 Industrial Economics and International Management Aims and Research Activities

serve as a platform for discussions on policy rec- is achieved with new products, new services, and ommendations for each sector. improved processes. It is, thus, an important basis (http://www.zew.de/project530) for the judgement of German economy’s technological performance. The micro data is placed at the dis- Impact of R&D Programmes on Innovation: posal of external users in an anonymous form (Sci- An International Comparison entific Use File) for purely scientific and non-com- The Lisbon Objective – making the EU “the most mercial purposes. competitive and dynamic knowledge-based econo- (http://www.zew.de/project374) my in the world” – will only be achieved if R&D spending effectively and efficiently translates into High-Tech Start-Ups in Germany socioeconomic innovation. The IMPLORE study The project investigates the number and devel- analyses benchmarking strategies and methodolo- opment of firm foundations in the high-tech sector gies of national, European, and international R&D with special emphasis on the field of information programmes in order to assess and increase their and communication technologies (ICT) in Germany impact on innovation. The study was launched in as well as the firm foundations’ regional distribution 2006 and is being carried out by a consortium of using the ZEW Foundation Panel. A telephone survey eight organisations from six countries with ZEW as of 1,000 high-tech start-ups is conducted to analyse coordinator of the project. The study covers four the characteristics of the founders (level of educa- main activities. First, in the course of the study, ini- tion, job experience in science and industry) and of tiatives and research programmes on national and the firms founded (size, growth, pursuit of R&D, in- European level with significant impact on innovation novation activities). Moreover, obstacles to and de- are identified, listed, and mapped. Second, bench- terminants of success regarding the development of marking of methodologies is used in order to assess high-tech firm foundations as well as of associated the impact of R&D on innovation and the relevant potentials and risks are explored. The results show strategies adopted to increase this impact. Third, the that the downward trend with respect to the number study identifies good practice in design, manage- of foundations in the technology- and knowledge- ment, and implementation of R&D initiatives and intensive branches has been accelerating in 2005. Fi- programmes, and analyses possible and most ef- nancial constraints are the most widespread obsta- fective means to diffuse them. Finally, an interna- cle among firms in the high-tech industry and are al- tional conference will be organised to present, val- so perceived as a future risk factor. Another often cit- idate, and disseminate the results and pave the ed obstacle to the firms’ development is the lack of way for further cooperation of the involved actors in qualified personnel. At the same time, the qualifi- order to maximise the benefits for the European In- cation of employees is one of the outstanding suc- novation Area. cess factors. (http://www.zew.de/project543) (http://www.zew.de/project541)

Mannheim Innovation Panel (MIP): Intellectual Property, Appropriation of Returns Innovation Activities of German Enterprises from Innovation and Competition The MIP is an annual survey on innovation ac- The role of patents and trademark rights for in- tivities of German enterprises from the manufactur- tellectual property has fundamentally changed in ing and services sectors starting in 1993. It is the Ger- the 1990s. The number of patent applications has in- man contribution to EU’s Community Innovations creased notably faster than companies’ R&D ex- Surveys (CIS) conducted in 1993, 1997, 2001, and penditures, even though companies attribute a de- 2005. The MIP is designed as a panel survey and pro- creased role to patents in protecting innovations. vides important information on the introduction of Patents have gained a strategic importance that ex- new products, services and processes, the expen- ceeds their traditional role of appropriating direct ditures for innovations, and how economic success profits from R&D. The aim of this project is the the-

41 Aims and Research Activities Industrial Economics and International Management

oretical structuring and empirical analysis of the Rammer, C., B. Aschhoff, B. Peters, and T. Schmidt reasons for the observed changes in patent appli- (2005), Innovation Activities of German Enterprises – cations. The project is part of the first special re- New Results from the Annual Innovation Survey by the search area/Transregio in economics: Governance ZEW, in: Filho, W. and M. Waresa (Eds.), Economic and the Efficiency of Economic Systems. and Technological Dimensions of National Innova- (http://www.zew.de/project378) tion Systems, Frankfurt/Main, 42-70.

Selected Publications Selected Presentations

Czarnitzki, D. (2005), Extent and Evolution of the Fier, A. (2004), SMEs and Policy in Germany, Productivity Deficiency in Eastern Germany, Journal OMC Workshop of European Commission DG of Productivity Analysis 24(2), 211-231. Research, Brussels. Czarnitzki, D. and G. Licht (2006), Additionality Fryges, H. (2006), Hidden Champions – How of Public R&D Grants in a Transition Economy: The Young and Small Technology-Oriented Firms Can At- Case of Eastern Germany, Economics of Transition tain High Export-Sales Ratios, International J.A. 14(1), 101-131. Schumpeter Society (ISS) Conference “Innovation, Gottschalk, S. (2005), Microdata Disclosure Con- Competition and Growth: Schumpeterian Perspec- trol by Resampling – Effects on Regression in Re- tives”, Sophia-Antipolis. sults, Jahrbücher für Nationalökonomie und Statis- Licht, G. (2004), Public R&D and Stimulation of tik (Special Issue: Econometrics of Anonymized Mi- Private R&D Activities, German Federal Ministry of cro Data) 225(5), 567-583. Education and Research (BMBF), Berlin. Griffith, R., E. Huergo, J. Mairesse, and B. Peters Peters, B. (2005) The Relationship Between (2006), Innovation and Productivity Across Four Eu- Product and Process Innovations and Firm Per- ropean Countries, Oxford Review of Economic Policy formance: Microeconometric Evidence, Annual Con- 22(4), 483-498. ference of the European Association for Research in Grimpe, C. (2006), Making Use of the Unused: Industrial Economics (EARIE), Porto, and Interna- Shelf Warmer Technologies in Research and Devel- tional Industrial Organization Conference (IIOC), opment, Technovation 26(7), 770-774. Atlanta. Niefert, M. (2006), Patenting Behavior and Em- Sofka, W. (2006), Innovation Processes Fostering ployment Growth in German Start-Up Firms, in: the Creation of Lead Markets: A Company Perspec- Fritsch, M. and J. Schmude (Eds.), Entrepreneurship tive on Lead Market Potentials, Europe INNOVA The- in the Region, International Studies in Entrepre- matic Workshop on “Lead Markets and Innovation”, neurship, Vol. 14, New York, 113-142. Munich.

42 Corporate Taxation and Public Finance Aims and Research Activities

Research Department “Corporate Taxation and Public Finance”

The department’s guiding research question con- Research Area “Corporate Taxation and Analysis cerns the consequences of increasing international of Tax Locations” mobility of capital, companies, and labour on the public sector both in Germany and the European In this research area, the comparative analysis of Union. The ongoing research activities are centred the tax burden imposed on companies in industrial around the following three research areas: “Corpo- countries is conducted. Over the years, ZEW has rate Taxation and Analysis of Tax Locations”, “Fiscal built up and constantly improved its empirical mod- Competition and Federalism”, and “Fiscal Policy els for these detailed comparisons. In cooperation and Growth in the EU”. with the University of Mannheim, ZEW researchers The first research area “Corporate Taxation and have developed a specific software tool, the “Euro- Analysis of Tax Locations” looks back at a systematic pean Tax Analyzer”. This programme simulates the evolution since ZEW’s founding in 1991. Here, com- tax assessment of a representative firm taking into pany taxation in Europe including tax harmonisation account all relevant taxes, their interactions, and and reform debates is covered. The methodological specific features such as tax credits and reduced focus is on the development and constant improve- tax rates. ment of models for tax burden comparisons (among Supplementing the European Tax Analyzer, a others, the well-established “European Tax Analyz- number of alternative empirical models for interna- er”). Our research activities are conducted in close tional tax comparisons have been implemented and cooperation with the University of Mannheim. applied for a constantly growing number of countries The second research area “Fiscal Competition and regions. For example, effective marginal and and Federalism” is devoted to the study of govern- average tax rates are calculated on the basis of the mental structures and federalism under the con- Devereux and Griffith approach. A project commis- straints of growing factor mobility. Both German fed- sioned by the European Commission is devoted to eralism and the vertical division of tasks between the calculation of these effective tax rates for a large the European Union and the member states are be- number of countries as well as for historical data in ing scrutinised. order to produce thoroughly based time series on The third research area “Fiscal Policy and the effective tax burden on companies. Growth in the EU” is differentiated from the other An important extension of the empirical toolbox two by its rather macroeconomic focus. The proj- of the recent time concerns the taxation of highly ects conducted look into the necessities of sus- qualified employees. The implemented model, tainable and growth-friendly fiscal policy. A core called the “Human Resource Tax Analyzer”, allows empirical question is the link between the con- quantifying the tax burden for both purely national duct of fiscal policy and growth potential. In addi- employment and cross-border expatriate employ- tion to taxation, particular attention is being paid ment in the EU-25 countries and a number of other to public debt. industrial countries. The composition of these three areas with their In a number of contexts and in cooperation with individual focuses guarantees that the micro-ori- partners like BAK Basel Economics, these models are ented views on tax policy and tax reactions are not successfully applied to the production of interna- detached from more aggregated views on the impact tional tax rankings and empirical research, e.g., with of tax policy on the overall economy. The explicit in- regard to the potential role of taxes as a determinant clusion of the federal dimension of fiscal policy in of locational decisions and growth. Europe implies that empirical research can be based A further topic of this research area deals with ison detailed knowledge of institutions in Germany sues resulting from harmonising trends and tax pol- and the European Union. icy in the European Union. Currently, the Commis-

43 Aims and Research Activities Corporate Taxation and Public Finance

sion’s initiative to harmonise the company tax base (“EU-CONSENT”) with ZEW as the responsible team is the focus of active projects. Attention is also paid leader for those network partners working on the Eu- to potential consequences of using the Internation- ropean fiscal constitution. al Financial Reporting Standards for taxing multi- Further active and planned projects explore the nationals in Europe. mechanisms of fiscal competition among countries Based on its thorough empirical knowledge and or sub-national government entities. One empirical long-run experience with the trends and challenges project funded by the German Science Foundation of German and European tax policy, the department (DFG) exploits the German Bundesbank’s database regularly contributes to the German tax policy de- on foreign direct investment in order to derive multi- bate. In this context, ZEW has joined the University national companies’ tax reactions with regard to of Mannheim, the German Council of Economic Ad- their financial structure or to transfer pricing. An visors, and the Max Planck Institute Munich in de- ongoing study based on effective tax burden series signing a tax reform model for Germany based on the searches for mutual influences of neighbouring dual income tax approach. countries’ tax policies. Projects like that benefit from the department’s strong position with regard to high quality tax data. Research Area “Fiscal Competition In the future, this area’s research will experience and Federalism” a certain augmentation of research interests. Cur- rently, projects are being initiated that look at fed- This research area is devoted to the conse- eral interactions related to public sector efficiency. quences of high factor mobility on the federal struc- A significant shortcoming of the fast-growing literature of countries and on both sides of the budget. In ture on fiscal competition can currently be identified this sense, this area is of a more generalised nature for the link between competition and efficiency of compared to the clear taxation focus of the first re- communities, federal states, or countries. Deficien- search area. The mechanism of competitive inter- cies of the existing research concern both the cal- actions among governmental entities is of key in- culation of efficiency indicators and the identifica- terest. In this context, the differentiated structure of tion of spatial interactions. New projects are to im- the public sector from the upper EU level down to lo- prove on these issues with a particular focus on cal communities is included in the analyses. Fur- German local communities and federal states. In- thermore, research projects also deal with the non- novative approaches on this field are promising not profit sector as a border case of public sector activ- only from a purely academic point of view but also ities. from possible applications in policy advice. For coun- With regard to the German fiscal constitution, tries like Germany facing a dramatic demographic an ongoing dissertation is devoted to incentive ef- change, the optimisation of public sector efficiency fects of fiscal equalisation on budgetary policy of is a key policy objective. federal states. In the course of this project, the Ger- A further augmentation of this area’s research man fiscal equalisation system has been modelled programme targets at the inclusion of the non-prof- in detail. In a series of projects, the department has it sector into the research on public sector phe- looked into the EU fiscal constitution in general and nomena. The non-profit sector is amazingly under- the EU budget in particular. For the German foreign researched given its large size in many industrial ministry, the department has developed a software countries. It is also obvious that non-profit activities tool to quantify distributive consequences of the on fields like health, old age care, science, or edu- EU budget for the EU-27 countries. This tool has cation have a large potential to contribute to the pro- been applied by the foreign ministry during the ne- vision of goods which, by tradition, have been pro- gotiations on the EU financial framework for the duced by the public sector. In this context, both years 2007-2013. Research insights from this field new research issues – public sector efficiency and are being fed into a European network of excellence the non-profit sector – have an obvious link. An im-

44 Corporate Taxation and Public Finance Aims and Research Activities

From left to right: Michael Grünewald, Sebastian Hauptmeier, Alexander Kalb, Timo Reister, Heidi Schielke, Sarah Borgloh, Jost Heckemeyer, Carsten Wendt, Friedrich Heinemann, Steffen Osterloh, Philipp Mohl, Marcus Kappler, Astrid Kremser, Christof Ernst, Christina Elschner portant strategic partnership on the field of non- economic focus via the ZEW research group “Growth profit-research exists between ZEW and the Centre and Business Cycle Analyses”. for Social Investment, which has been recently es- A focus of this area’s empirical projects is on tablished at the University of Heidelberg. the study of growth determinants where particular attention is paid to fiscal variables. New approaches of panel econometrics are applied which show Research Area “Fiscal Policy and Growth how relevant certain determinants empirically are in the EU” which have been identified by new growth theories. A current project specifically deals with the overall Activities in this research area revolve around context of tax systems, marginal tax rates, labour the mutual link between fiscal policy and economic supply, and growth. Here, the research contributes growth. The key question is how the public sector in to the important policy debate on the US-EU growth Germany and the EU can and should be evolve in or- differential as well as the hypothesis that lower Eu- der to contribute to a higher potential growth. The ropean labour input largely is a consequence of logical connection to the first two research areas is higher marginal tax rates on labour. obvious since tax competitiveness or public sector The link between fiscal policy and growth is efficiency are relevant dimensions of a country’s prominent for public debt sustainability issues. growth potential. However, a methodological dif- Hence, questions of budgetary sustainability are a ference in comparison to the first two is the more further focus of this research area. In cooperation macroeconomic approach of this area. In ZEW’s or- with the Bertelsmann Foundation, ZEW has devel- ganisational context, this research area is strongly oped the “Schuldenmonitor” (“Debt Monitor”) which linked to other ZEW researchers with a rather macro- evaluates budgetary sustainability for the German

45 Aims and Research Activities Corporate Taxation and Public Finance

Laender. For these in-depth analyses, the empirical ferent tax systems with respect to different sources models on the German fiscal equalisation system of finance and types of investment is evaluated are being used which have been developed in the re- with an additional focus on small- and medium- search area “Fiscal Competition and Federalism”. sized enterprises (SME). The aim of the study is Thus, a detailed forward-looking picture of the budg- twofold. On the one hand, we analyse the devel- etary situation of German states can be drawn com- opment of effective corporate tax rates on domes- prising the manifold and intransparent redistributive tic and cross-border investments within the en- effects of German fiscal equalisation mechanisms. larged European Union (EU-25) and a number of The specific expertise on sustainability issues has non-EU countries for a wide range of years. The de- initiated an active cooperation with researchers of termination of tax rates is based on the method- the European Central Bank, which has recently re- ological approach by Devereux and Griffith. On the sulted in a common publication in the ECB Working other hand, we also consider special tax schemes Paper Series. for SME within the EU-25 and the taxation of non-in- Closely connected to growth empirics are cur- corporated SME in selected countries. We compare rent and planned research activities scrutinising the situation for SME with large companies and the determinants of a country’s capability to re- analyse how this situation is affected by the choice form. Industrial countries show distinct differences of legal status. regarding the speed of their institutional adjust- (http://www.zew.de/project547) ment to quickly changing constraints. The reasons for phenomena like the slow pace of change in big Tax Effects on International Business Activities continental EU countries are hardly understood. The aim of this research project is to analyse the The same lack of knowledge holds, for example, for impacts of company taxation regarding cross-bor- the question why a country like Germany is so slow der business activities of multinational enterpris- to react to the intensified tax competition of its es. Especially in Europe, international business neighbours, even though the country suffers in activities are of particular importance concerning terms of a loss in tax base and tax revenues. It is taxation since enterprises are comparatively free to worth mentioning that the empirical work on this operate their businesses from different countries field is not limited to the usual econometric tools. within the single European market, but the effective In addition, the department cooperates with psy- tax burdens on companies significantly differ chologists from the universities of Salzburg and among these various locations. Thus, countries Munich in the design and execution of experi- compete with each other for the establishment of ments. This cooperation allows including recent subsidiaries as investment locations. new insights from behavioural psychology and Otherwise, this fact gives rise to tax planning by economics. the parent company due to transfer-pricing and group-financing decisions. There is not much empirical evidence regarding the impacts and appli- Selected Research Projects cation of tax planning except for some well-known case studies, although tax planning makes the Effective Levels of Company Taxation Within complete taxation of the entire business profits an Enlarged European Union very difficult. This absence of empirical research The EU enlargement with 10 new member states complicates the evaluation of reform proposals considerably widens the EU-internal market and concerning company taxation. Against this back- opens it to participants with very different levels of ground, the research project aims at analysing the economic development. In this context, this study tax planning activities of multinational German analyses the development of the tax burden on companies using the information about invest- companies operating in the countries of the en- ment behaviour in the existing database of larged European Union. The neutrality of the dif- Deutsche Bundesbank and applying adequate

46 Corporate Taxation and Public Finance Aims and Research Activities

econometric methods. Albeit the particular impor- researchers with an interest to the EU’s fiscal con- tance of this subject in the fields of Business Ad- stitution. ministration and Public Finance, such an empirical (http://www.zew.de/project483) analysis regarding German enterprises is not exis- tent at the moment. Public Debt Monitor: Coverage of Public Debt (http://www.zew.de/project477) in Germany This project aims at a regular monitoring of fiscal Taxation Knowledge Database sustainability in Germany, both at the state (includ- For the measurement and international comparing social security) and the federal level (including ison of effective tax burdens, ZEW has already municipalities). Using a scientifically founded con- achieved comprehensive knowledge. The institute cept as well as comprehensible and transparent as- has developed own approaches (e.g., European Tax sumptions and calculations, the consolidation need- Analyzer) and applies additional models (e.g., Dev- ed for the individual households are quantified, ereux/Griffith) for the measurement of internation- and the current consolidation efforts are evaluated. al effective tax burdens. This includes the develop- The new version of the “Public Debt Monitor” up- ment of software solutions. Besides, ZEW has a dates the data of the former study of 2005 and com- huge amount of data on the taxation systems in pares the results of both studies. many different countries including the member (http://www.zew.de/project568) states of the European Union and some important states outside the EU. These data about the different types of taxes, the tax bases, and the schedules Selected Publications has not yet been collected and stored at a central point or location. Eichler, M., C. Elschner, and M. Overesch (2005), Against this background, the aim of the project is IBC Taxation Index 2005, Comparison of the Effective twofold. First of all, the whole knowledge about tax- Tax Burden of Companies and Highly Qualified Man- ation systems at ZEW shall be collected and stored power in European Regions and the United States, in a computer-based database (Taxation Knowledge BAK Basel Economics, Mannheim. Database) to create an archive and to make it easi- Elschner, C., L. Lammersen, M. Overesch, and er to get information about a special state of inter- R. Schwager (2006), The Effective Tax Burden of est. The second aim is that all ZEW’s software solu- Companies and on Highly Skilled Manpower: Tax tions as well as external ones should be able to ac- Policy Strategies in a Globalized Economy, Fiscal cess this database. Studies 27(4), 513-534. (http://www.zew.de/project462) German Council of Economic Experts, Max Planck Institute for Intellectual Property, Competition and EU-CONSENT Tax Law, and ZEW (2006), Reform of Income and Com- “EU-CONSENT” – a network of excellence for joint pany Taxation by the Dual Income Tax, Schriftenreihe research and teaching – will look at the construction des Bundesministeriums der Finanzen, Vol. 79, Bonn. of a new Europe, especially in 2005-2008. It will ad- Hauptmeier, S., M. Heipertz, and L. Schuknecht dress the question of mutual reinforcing effects of (2006), Expenditure Reform in Industrialised Coun- deepening and widening. Within an innovative, for- tries: A Case Study Approach, ECB Working Paper No. ward-looking, analytical framework, 25 teams will 634, Frankfurt/Main. test lessons from the past in view of their academic Heinemann, F. (2006), Planning or Propaganda? and political validity for discussing visions and sce- An Evaluation of Germany’s Medium-Term Budgetary narios for the future. The major leitmotif is that the Planning, Finanzarchiv 62(4), 1-28. EU is in full process of reinventing itself – a devel- Stegarescu, D. (2005), Public Sector Decentral- opment which is, however, difficult to grasp and ex- ization: Measurement Concepts and Recent Inter- plain. ZEW’s role in the network is devoted to linking national Trends, Fiscal Studies 26(3), 301-333.

47 Aims and Research Activities Corporate Taxation and Public Finance

Selected Presentations shop “The Budgetary Implications of Structural Reforms”, Brussels. Elschner, C. and M. Overesch (2006), IBC Taxa- Kappler, M. (2005), Determinants of Long-Run tion Index 2005 – Effective Tax Burden of Companies Growth in Industrial Countries, Conference on and on Highly Skilled Manpower, OECD Workshop Business Cycles and the Role of Government in “Effective Corporate Taxation”, Paris. Japan and Germany, Japanese-German Center, Hauptmeier, S. (2005), Fiscal Sustainability in Berlin. Germany, European Central Bank, Frankfurt/Main. Wendt, C. (2006), EU Company Taxation in Case Heinemann, F. (2005), Fiscal Preconditions for of a Common Tax Base, Congress of the IIPF (Inter- Structural Reforms – Or How Far Apart Are Lisbon national Institute of Public Finance) “Public Finance: and Maastricht?, European Commission Directorate Fifty Years of the Second Best – And Beyond”, Pa- General for Economic and Financial Affairs Work- phos (Cyprus).

48 Environmental and Resource Economics, Environmental Management Aims and Research Activities

Research Department “Environmental and Resource Economics, Environmental Management”

The research department “Environmental and ■ The research area “Energy Economics” investi- Resource Economics, Environmental Management” gates environmental policy-induced develop- is primarily devoted to the challenges of sustainable ment of the framework for the liberalised Euro- development. With respect to both the goals of sus- pean energy industries, such as the introduction tainability and the means of accomplishing these, of EU-wide CO2 emissions rights trading. there exist diverging social and political ideas. It is ■ The research area “Transport and Mobility” is de- crucial to specify and operationalise the concept of voted to the question about how transport and sustainable development with the aid of indicators mobility needs are to be met on a long-term sus- in order to evaluate policy proposals on a compar- tainable basis. Shifts of transport modes and in- ative basis. The research area’s objective is to creasing transport efficiency are the primary reg- analyse questions of the transition to sustainable ulative concepts under consideration. economic structures by applying the relevant mi- ■ In the research area “International Environmen- croeconomic and microeconometric methods and to tal and Resource Policies”, regulatory systems develop politically feasible guidelines for action. for sovereign states addressing the institution- Rational decision-making support in almost every alisation of cross-border and global environ- environmental policy field – including energy, trans- mental and resource policy are of central con- portation, and research policy – requires the model- cern. Under investigation is especially how, in ling and, as far as possible, the quantification of eco- the presence of global environmental externali- nomic and environmental impacts of alternative strate- ties, economic incentives und welfare prefer- gies. Only in doing so may conflicting goals be iden- ences must be accounted for in order to prevent tified and forcefully assessed. Moreover, size and dis- free-riding and promote the efficiency of inter- tribution of potential adjustment costs determine the national environmental protection. acceptability of transformations derived from sus- ■ The research area “Macroeconomic Analysis of tainability considerations. Accordingly, next to envi- Environmentally Relevant Policies” assumes ronmental impacts, quantitative information con- the task of quantitative evaluation of economic cerning the effects of environmental and economic policy regulation, particularly as regards envi- policies on the economy as a whole, on economic ronmental, energy, transport and climate pro- sectors, and on private and public households are of tection policy, as well as the associated struc- great significance for decision-making support. tural change. A model-based macroeconomic Against this background, the research depart- analytical framework permits systematic and ment’s commitment reflects a profile characterised consistent measurement of the impact of policy by problem consciousness in the analysis of present measures on the three dimensions of sustain- environmental and economic policy issues as well as able development: ecology, economy, and so- by scientific competence regarding the methods cial equity. employed in the analyses. The tasks of the research department are structured along five focus areas: Research Area “Innovation and ■ The research area “Innovation and Sustainable Sustainable Development” Development” analyses the determinants and economic impact of environmental innovations. Environmental process and product innovations Moreover, rules, indicators, and strategies for are at the core of sustainable development in con- sustainable development are made subject to serving resources for future generations. Innovation further explication. research conducted in environmental economics is

49 Aims and Research Activities Environmental and Resource Economics, Environmental Management

today concerned with microeconometric analyses The assessment of regulations and policy op- of the determinants of environmental innovations on tions is predominantly based on welfare economic the firm level. The basis for such analyses is mainly approaches. So far, the research area has evaluated firm-level data obtained by mail-in or telephone sur- environmental policy regulation in the energy sector, veys. Empirical studies on the relationship between such as the German environmental tax (Ökosteuer), environmental regulation, environmental innova- with respect to subsidies for renewable energies tions, and (financial) corporate success will contin- (e.g., the Erneuerbare-Energien-Gesetz in Germany), ue to characterise the scientific contribution to the as well as the European emissions trading scheme. economic policy discourse on sustainability and In the future, aspects of overlapping regulation as competitiveness. well as questions of market power and the devel- Establishing sustainable economic structures opment of competitive markets in the European en- necessitates the adoption of environmentally friend- ergy industries are to be investigated. ly products by consumers. Economic policy seeking As part of the cross-departmental research pool to guide future directions must, therefore, be based “Empirical Industrial Policy”, empirical analyses on on the identification of the determinants of demand the regulation of the grid-bound energy industry are for environmentally relevant goods and services by planned, providing a dynamic view with respect to consumers. To this end, stated preference surveys market concentration, investment, and innovation will be conducted with respect to selected con- behaviour. sumption decisions in the areas of transport and en- Besides methods for the analysis of market out- ergy, e.g., the choice concerning alternative fuel comes (such as the planned analysis of mergers technologies or energy supply (conservative vs. re- based on M&A data sets), the research area em- generative). ploys and continually develops microeconomically vested simulation models in order to assess expected efficiency and distribution effects of regu- Research Area “Energy Economics” lations. Hybrid general equilibrium models of the overall economy, combining the technology-based Research in the area of “Energy Economics” fo- description of the energy systems with the aggre- cuses on the formulation of goals and the choice of gated description of technology options and con- instruments in European and national energy pol- sumer preferences, allow for macroeconomic eval- icy. Within the threefold constellation of political uation of discrete technology policies, such as the objectives, i.e. efficiency, supply security, and en- transition to a hydrogen-based economy or con- vironmental compatibility, the consideration of spe- tinuation of nuclear energy. Complementarily, a cific technological and economic characteristics of multi-regional market model for the European elec- electricity and natural gas markets – such as the tricity industry is continually being developed, grid-bound nature of electricity supply, storage as- which reflects in detail the respective production, pects, and the long-term nature of investment de- trade, and consumption patterns. Beginning with a cisions connected to energy conversion and supply static perspective, the model is to be used to in- – is essential. These aspects raise complex regu- vestigate the influence of market structures and latory issues regarding the introduction of com- regulatory measures on prices, volumes (energy petitive energy markets, e.g., barriers to market mix), and competitive position of energy firms on a entry, investment, and innovation incentives, which European level. are beyond conventional environmental problems Further research addresses political economic of energy supply. In addition, the interplay of reg- aspects of energy policy. In this way, the German en- ulatory institutions on the national and suprana- vironmental tax reform’s sectoral differentiation of tional level as well as the interaction of different tax rates is theoretically explained on behalf of po- policy instruments constitute important areas of litical support models and approaches of informa- investigation. tion transfer between groups and political decision-

50 Environmental and Resource Economics, Environmental Management Aims and Research Activities

From left to right: Christoph Böhringer, Georg Bühler, Tim Hoffmann, Kornelia Peter, Ulf Moslener, Astrid Dannenberg, Bodo Sturm, Ulrich Oberndorfer, Niels Anger, Claudia Hermeling, Sabine Jokisch, Henrike Koschel, Victoria Alexeeva-Talebi, Tim Mennel, Martin Achtnicht, Klaus Rennings makers. Furthermore, a political economic analysis the trade-off in terms of meeting transport and mo- of the European emissions trading system is being bility needs in an environmentally responsible and prepared, in which the influence of interest groups economically efficient way. on the sectoral allocation of emissions rights will be Basically, transport policy governs three ap- investigated. proaches: First, the decoupling of transport demand The ZEW Energy Market Barometer continues as and the overall economic development can be pur- a biannual survey of market participants and ex- sued; second, the shifting of transport needs to en- perts concerning current issues of energy policy. vironmentally friendlier modes can be attempted; The conceptual outline and analysis of its findings third, the efficiency of transportation can be provide an important link between current energy increased. The research area essentially focuses on policy debate and applied economic research. the approaches of shifting transport and increasing efficiency, e.g., through the use of energy-efficient engines as well as alternative fuels in passenger Research Area “Transport and Mobility” cars. Ongoing and future research of economic im- Economic growth and especially the increasing portance comprises the integration of alternative globalization of industry and trade will continue to engine technologies as well as the required infra- act as a driver of further transport demand. As a structure for the market implementation. downside, negative external effects on environment The TransportmarktBarometer (Transport Market and natural resources are linked to this develop- Barometer) for the shipping and transport industry, ment. The research area “Transport and Mobility” developed in cooperation with the ProgTrans AG, seeks out regulatory concepts capable of addressing will be continued in the future as well. The quarter-

51 Aims and Research Activities Environmental and Resource Economics, Environmental Management

ly survey delivers an among experts and the press As another research topic, the role of financial much-requested sentiment indicator of expectations market instruments in environmental policy is being regarding price and volume on the five transport addressed in cooperation with the research depart- markets road, rail, inland and international sea ship- ment “International Finance and Financial Manage- ping, and air freight as well as the two specialised ment”. This research investigates where the dis- markets of combined transport and courier and ex- tinctions have to be made between markets for emis- press services. sions certificates and established markets for stocks and financial derivatives. In addition, it is planned to take a closer look at Research Area “International Environmental and the significance of federal structures in EU environ- Resource Policies” mental policy in the future. That is, for example, the multiple levels of political decision-making in the Eu- In contrast to national agendas, international ropean emissions trading system – particularly the environmental policy requires the cooperation of EU-level emission-trading directive and the nation- sovereign states: The fundamental incentive prob- al level implementation through allocation plans – lems of public goods cannot be resolved by isolat- are to be primarily analysed from a political econo- ed intervention. The central topic in this research my perspective. area has up to date been the analysis of interna- The evaluation of genetically modified organ- tional climate policy and – in light of continued isms (GMO) and the design of various coexistence pressures – will continue to comprise the core of the rules within the EU constitute a quite new and po- research done. The short- and mid-term agenda of litically relevant research topic in the area of inter- international climate policy focuses on efforts re- national resource policy, which is being addressed lated to including the USA as well as important de- in cooperation with the research department “In- veloping countries, such as China and India, in an industrial Economics and International Management”. ternational climate regime. Within this project, among others, the question of Against this background, the basic research be- how different labelling schemes influence the valu- ing conducted by the research area analyses the ation of GMO food is going to be analysed with the determinants of voluntary cooperation among sov- help of laboratory experiments. ereign states. Of primary interest here is the question concerning the influence of equity beliefs and distinct burden sharing rules on the success chances Research Area “Macroeconomic Analysis of international treaties: How can diverging con- of Environmentally Relevant Policies” ceptions of fairness of the various parties be integrated into a decisive climate protection deal? The This research area is concerned with quantitative analysis relies on game theoretical methods. analysis of economic policy regulations from a Further research activities concentrate on nu- macroeconomic point of view, especially in the field merical simulation analyses of the economic im- of environmental, energy, transport, and climate pacts of international climate protection policies by protection policy. Besides macroeconomic effects, means of microeconomically vested partial and the regulation-induced structural change on the sec- general equilibrium models. Questions concern- toral level is taken into account as well. ing the implementation of present-day climate pol- Due to the wide-ranging potentials for applica- icy instruments, such as emissions trading, joint tion and development of the macroeconomic mod- implementation, and the clean development mech- elling framework, the research area occupies a re- anism as well as the realisation of the Kyoto com- sourceful function across the department, often mitments in the EU and Germany, can be evaluat- complementing partial analytic research by quanti- ed on behalf of results on efficiency and distribu- tative assessment of the macroeconomic effects. tion effects. On the receiving end, projects of the other research

52 Environmental and Resource Economics, Environmental Management Aims and Research Activities

areas provide stimulus for linkages to complemen- Selected Research Projects tary models: CGE models are primarily suited to measure sustainability impacts of policy measures Indicators and Quantitative Tools for Improving on the regional, sectoral, and household level; ow- the Process of Sustainability Impact Assessment ing to the relatively pronounced degree of abstrac- (IQ TOOLS) tion, however, limits are posed with respect to de- The I.Q. TOOLS project developed internet-based tailed assessments. Partial models generally contain software designed to support the process of impact significantly more pertinent detail on technological assessment within the European Commission. This conditions (e.g., technical models of energy sys- software is designed to provide necessary informa- tems), socio-economic behavioural patterns of tion for each step of the impact assessment and households (e.g., micro-simulation models), or help to structure this information in a meaningful fields of natural science (e.g., climate models, mod- way. I.Q. TOOLS provides resources supporting desk els of water, or land use). officers to assess the potential intended and unin- Against this background, current and future de- tended impacts of policy initiatives on the econom- velopment efforts of the research area aim at the ic, environmental, and social dimensions of sus- combination of CGE and partial models. One exam- tainability and the significance of those impacts. ple in the field of climate policy is the combination (http://www.zew.de/project371) of dynamic CGE models of world trade and energy consumption with long-term climate models. In the Case Study Comparisons and Development of integrated assessment framework, global strategies Energy Models for Integrated Technology Systems can be derived from that for the efficient realisation (Cascade Mints) of climate protection goals, such as the stabilisation CASCADE MINTS is a project involving the devel- of greenhouse gas concentrations or the limitation opment and use of energy and energy/economy mod- of long-term temperature increases. Another exam- els with special emphasis on analysing technological ple is the combination of top-down economy and developments. It is essentially split into two distinct bottom-up energy systems models into a hybrid an- parts: Part 1 focuses on modelling, scenario evalua- alytical instrument that allows for the evaluation of tion, and detailed analysis of the prospects of the hy- the macroeconomic impact of discrete technology drogen economy. The ultimate aim of this part of the policies. project is to enable perspective analysis of the con- On the international level, the research area is ditions under which a transition to an energy system involved in various networks on model-based dominated by hydrogen is possible. Part 2 does not in- analysis of energy and climate policies. The coor- volve significant model development. Its main aim, in- dinating role with respect to the activities of the stead, is to use a wide range of existing operational “Energy Modelling Forum” (EMF 22) on the design energy and energy/economy models in order to build and evaluation of short- and mid-term global cli- analytical consensus (to the extent that this is possi- mate protection strategies as well as the partici- ble) concerning the impacts of policies aimed at sus- pation in a research association on hybrid energy- tainable energy systems. The emphasis in the current economy modelling should be particularly high- version of this joint case study project will be on poli- lighted. cies influencing technological developments. A further important exchange forum – original- (http://www.zew.de/project417) ly initiated by the research area – is the “Climate Policy Network” (CPN, http://cpn.zew.de) in coop- HyWays – The Development and Detailed eration with the Massachusetts Institute of Tech- Evaluation of a Harmonised European Hydrogen nology (MIT), Resources for the Future (RFF), and the Energy Roadmap Fondazione Eni Enrico Mattei (FEEM), hosting a In developing the European Hydrogen Roadmap, transatlantic dialog on the shape of future climate the HyWays partners closely interlink with the Euro- policy. pean Commission to investigate the techno- and

53 Aims and Research Activities Environmental and Resource Economics, Environmental Management

socio-economic conditions for introducing hydro- egoistic bargaining position. Traditionally, climate gen as a future energy carrier and fuel. A toolbox protection is characterised as a global public good from well-known, widely accepted, and tested sim- in economics. In contradiction to public goods on ulation tools with well-defined interfaces will be the state or national level, no single authority is in used for the consensus process to identify the tech- place to force desired cooperative behaviour of the nical, macro-, meso- and microeconomic, and poli- stakeholders involved. Accordingly, sovereign cy framework conditions for the establishment of a states’ cooperation only happens on a pure volun- sustainable hydrogen energy system. It will com- tary basis. This represents a major aggravation of the prise a comparative analysis of regional hydrogen already short-handed incentive structure posed by supply options and energy scenarios, including republic goods. Throughout the 1990s, double-tier newable energies. Though, an initial emphasis will coalition games were devised in order to generate be pathways to a hydrogen infrastructure for trans- voluntary cooperation. Based on neoclassical as- port fuel, synergies for stationary and portable end- sumptions, these models, however, arrive at rather use will also be considered. dim prospects regarding the realisation of interna- Regional or candidate state-specific issues are tional cooperation. The project, funded by the Ger- evaluated in partnership with local energy experts. man Research Association (DFG), counters with the In Phase I (18 months), the involved European hypothesis that certain groups within society will in- countries will be represented to develop and vali- deed take fairness criteria into consideration (e.g., date the toolbox. Experienced coordinators of all per capita emissions, proportional abatement ef- other regions are also invited in Phase I to under- forts etc.). Of course, such aspects revolving around stand HyWays methods and progress and to pro- the concept of fairness are immediately evident from vide input about their specific hydrogen energy the issue of proportionality between industrialised policy situation. These regions will then be select- and developing world. Besides ubiquitous cost-ben- ed, based on various criteria such as motivation, efit rationale, a government, pressed by election country-specific characteristics etc., in order to be- cyclical concerns, will additionally have to take cer- come one of further 5-7 active HyWays partners in tain generally applied fairness measures into ac- Phase II. Here, the framework is applied as devel- count. With respect to equity-preferential incentive oped in Phase I, and an integral and validated structures, a non-cooperative game scheme is ap- roadmap is designed. plied to international climate negotiations. Major deliverables of HyWays are the European (http://www.zew.de/project138) Hydrogen Energy Roadmap including a technical report and strategy document and recommendations TETRIS – Technology Transfer and Investment Risk for stakeholders concerning realistic regional op- in International Emissions Trading tions to build the hydrogen energy infrastructure. The TETRIS project aims at exploring the eco- The timeline considered will be the transition peri- nomic and industrial impacts as well as the od until 2020 with a visionary view to an estab- prospects for achieving technology transfer associ- lished hydrogen energy system until 2050, then ated with the implementation of the Kyoto flexible mostly based on renewable energies. mechanisms. Comprehensive risk indicators meas- (http://www.zew.de/project388) uring the risks of investing in climate change miti- gation in foreign countries will be developed. Using International Negotiations on Climate Protection quantitative methods and actual market experience in the Context of Domestic Climate Policy from early transactions involving a broad range of This project investigates the institutionalisation technologies, the technology transfer and cost sav- of multilateral environmental negotiations. In par- ings will be assessed that can be realized through ticular, using a game theoretical approach, the re- the Clean Development Mechanism (CDM) and Joint sults achieved in international climate negotiations Implementation (JI). Another goal of the project is to shall be explained in terms of the respective parties’ examine to what extent greenhouse gas emissions

54 Environmental and Resource Economics, Environmental Management Aims and Research Activities

trading schemes outside the European Union are istics of the EU Environmental Management and Au- compatible with each other and the proposed Euro- diting Scheme on Technical Environmental Innova- pean emissions trading scheme. Our results will tions and Economic Performance, Ecological Eco- provide valuable insights into technology transfer nomics 57(1), 45-59. and risk management in carbon markets for policy- makers and the business community. (http://www.zew.de/en/kooperationen/UMW/ Selected Presentations TETRIS) Anger, N. (2006), Linking Emissions Trading Schemes Versus “Kyoto” Trading: An Economic Im- Selected Publications pact Assessment, World Conference of Environ- mental and Resource Economists (EAERE), Kyoto. Beise, M. and K. Rennings (2005), Lead Markets Böhringer, C. (2006), Integrated Bottom-Up into and Regulation: A Framework for Analyzing the In- Top-Down: A Mixed Complementarity Approach, ternational Diffusion of Environmental Innovation, FEEM European Summer School, Venice. Ecological Economics 52(1), 5-17. Moslener, U. (2004), Possible Paths for Interna- Böhringer, C., T. Hoffmann, A. Lange, A. Löschel, tional Negotiations, Climate Policy Network (CPN) and U. Moslener (2005), Assessing Emission Allo- Fall Meeting, Washington, DC. cation in Europe: An Interactive Simulation Ap- Rennings, K. (2006), The Influence of Different proach, Energy Journal 26(4), 1-22. Characteristics of the EU Environmental Manage- Böhringer, C. and A. Löschel (2005), Climate Pol- ment and Auditing Scheme on Technical Environ- icy Beyond Kyoto: Quo Vadis? A Computable Gener- mental Innovations and Economic Performance, al Equilibrium Analysis Based on Expert Judgements, World Conference of Environmental and Resource KYKLOS 58(4), 467-493. Economists (EAERE), Kyoto. Böhringer, C. and H. Welsch (2006), Burden Shar- Ziegler, A. (2004), Determinants of Environmen- ing in a Greenhouse: Egalitarianism and Sovereign- tal Innovations in Germany: Do Organizational Meas- ty Reconciled, Applied Economics 38(9), 981-996. ures Matter? A Discrete Choice Analysis at the Firm Rennings, K., A. Ziegler, K. Ankele, and E. Hoff- Level, Annual Congress of the European Economic mann (2006), The Influence of Different Character- Association (EEA), Madrid.

Information and Communication Technologies Aims and Research Activities

Research Group “Information and Communication Technologies”

The research group “Information and Communica- The research area “ICT and the Labour Market” tion Technologies” (ICT) deals with the economic as- emphasises the effects of ICT use on the qualifica- pects of ICT. Thereby, a main emphasis is laid on the tion requirements and the workplace situation of effects of ICT usage on firms as well as on employees. employees. Thus, especially training and on-the- The first focus is on the “ICT Sector and Diffusion job training measures as well as flexible forms of of ICT”. Thereby, it shall be pointed out that sectoral workplace organisation play an important role. approaches play an important role within the analy- The third focal point, “ICT, Competition and sis of the production and diffusion of ICT. Here, the Firm Strategies”, mainly includes industrial eco- ICT sector itself is analysed. It can be confined on a nomic aspects of ICT. Primarily, it deals with the narrower or broader basis depending on the aim of competition on ICT markets, such as on markets for the analysis. It can include IT and media industries internet infrastructure services or on the telecom- or be characterised by IT- and knowledge-intensive munication market. Beyond that, the productivity services as they were analysed within the scope of and innovation activity of firms and industries of- the business survey “Service Providers of the Infor- fering and using ICT are analysed. (IT) Outsourcing mation Society”. Diffusion analyses often oppose and internationalisation are considered within this the use of current information technologies in the scope as well. As firm strategies they are increas- user sectors and the ICT provider industries. Even- ingly gaining importance and are supposed to con- tually, the sectoral approach of the ICT diffusion can tribute to the strengthening of the competitive- be complemented by a macroeconomic approach. ness of firms.

From left to right: Jenny Meyer, Gordon Jochem Klein, Katrin Schleife, Ulrike Merkel, Irene Bertschek, Marianne Saam, Bettina Müller, Margit Vanberg, Katja Coneus, Daniel Cerquera, Jörg Ohnemus

57 Aims and Research Activities Information and Communication Technologies

The theoretical and empirical research is mainly use between rural and urban areas. For internation- conducted on a microeconomic and micro-econo- al comparisons in the ICT diffusion we refer to offi- metric level. The development of own collected firm- cially available publications such as the OECD or the level data sets concerning IT-specific topics pro- EITO (European Information Technology Observato- vides an essential basis for the empirical analyses. ry). Usually, the comparisons restrict to a description This basis is extended by the use of existing indi- and interpretation of available ICT indicators. vidual specific data sets. The research profile of the research group is located at the interface between industrial and labour market economic research. This Research Area “ICT and the Labour Market” is especially well founded by the cross-sectional character of information and communication tech- A lifelong learning has become a requirement nologies. for continuous success in the information economy. The rapid advancement of technologies to provide and process information demands an ongoing adap- Research Area “ICT Sector and Diffusion of ICT” tation of the users’ skills. Therefore, investments in human capital are of great importance at every age. Within this research area we follow the diffusion In this research area we investigate the conse- and usage of IT by conducting own firm surveys. quences of ICT use on individuals’ qualification re- The business survey “Service Providers of the Infor- quirements. Thereby, different groups of persons mation Society” includes IT- and knowledge-inten- play an important role. sive services industries in Germany. The survey has A special emphasis is laid on older employees. been quarterly conducted since 2002. On this basis, While these have left the labour market quite early in a new cyclical sentiment indicator, the “ZEW Indi- the last decades, due to either active encourage- cator Service Providers of the Information Society” ment by firms or due to institutional conditions, cur- (ZEW-IDI) has been published since 2003. In the rently a change can be observed. Against the back- scope of the FAZIT project (a research project for ground of the demographic development, institu- current- and future-oriented information and media tional conditions such as the increase in retirement technologies and their use in Baden-Wuerttemberg), age to keep older employees longer in the labour the development of the IT and media sector in market are established. Thereby, it will be of great im- Baden-Wuerttemberg is regularly observed by bian- portance to adapt the conditions at the workplace. nual surveys and is compared to the development of The interaction of new technologies on the one hand different IT-using industries. The surveys deal with and qualification and age structure of the employees current ICT trends for firms and the determinants and on the other hand will, thus, play a crucial role and constraints to introduce new ICT applications. A fur- shall be particularly analysed on the firm level. ther representative business survey of more than A further research topic refers to firm founders 4,000 firms belonging to the German manufacturing who – assuming an adequate qualification – provide industry and to selected services industries will take a basis for employment and economic growth. A place for the forth time in spring 2007. Conse- special emphasis in our analyses is laid on the im- quently, the survey enlarges an important database portance of higher education for founding firms in for this research area as well as for “ICT, Competition ICT- and knowledge-intensive industries. and Firm Strategies”. Another important question concerns the effects In addition to the analyses on the basis of firm- of increasing diffusion of ICT on the demand and level data, studies on a regional as well as an inter- wages for female employees. The very few studies national level are conducted within this research that have been conducted to this topic so far hy- focus as well. Despite the proceeding technological pothesise that women were able to improve their development and decreasing prices, there are still chances on the labour market by ICT diffusion and distinct differences in the computer and internet that they possess skills, such as interactive skills,

58 Information and Communication Technologies Aims and Research Activities

which are complementary to the use of ICT. On the internationalisation are preferred by IT- and knowl- basis of individual-level data (BIBB-IAB), we theo- edge-intensive firms and to what extent interna- retically and empirically analyse this hypothesis. tionalisation is facilitated by IT use. Last but not least, education already plays an im- The fast technological progress and the increas- portant role in the pre-professional phase, espe- ingly complex entrepreneurial structures require cially for skills that are necessary to acquire new more and more specialised knowledge. Therefore, knowledge, since at this stage first central qualifi- firms engage consulting services in order to secure cations are acquired. In cooperation with the re- an unobstructed implementation and use of their ICT search department “Labour Markets, Human Re- systems on the one hand and to create organisa- sources and Social Policy”, current and future proj- tional structures that enable an efficient ICT use on ects shall analyse skills, qualification and social in- the other hand. The extent to which these consult- tegration of young people from birth up to their ca- ing services contribute to firms’ innovative capabil- reer entry. Causes and effects of ICT and media use ity will be theoretically and empirically analysed. in relevant life phases will be considered. Aspects of competition play a role in both the supply and use of ICT. The internet is a classic example for a market with network externalities since Research Area “ICT, Competition and the advantage of an internet access increases with Firm Strategies” the number of firms and individuals that can be reached by it. To internalise these network exter- In the last years, two larger firm strategic trends nalities, interconnections between net islands as could be identified: the outsourcing of business well as the compatibility of the single nets are re- processes and – often connected to that – the in- quired. We investigate the question whether Internet ternationalisation of firms. Thereby, ICT use can fa- Service Providers (ISP) on the highest level of hier- cilitate outsourcing as well as the increasing inter- archy in the internet infrastructure possess market national diffusion of firms. The creation of informa- power by having net externalities available of which tion-based services can also be outsourced and – they can take advantage in their interconnections e.g., via internet – be transported in an easy, quick with smaller ISP. and low-priced way by using ICT. Using the example In the area of telecommunication, market struc- of the outsourcing of IT services, we analyse the de- tures have changed in the past years through dif- terminants of outsourcing as well as the conse- ferent deregulating measures. It is still being dis- quences for employment and productivity on the cussed whether there has been too much or too lit- basis of firm-level data. tle of regulation. In an international comparison, Outsourcing business processes abroad is the diffusion of broadband access is low in Ger- termed “nearshoring” or “offshoring” depending many which is ascribed to a deficit in competition. on whether the services are outsourced to nearby In the scope of the new ZEW research area “Empiri- countries, such as the Eastern European states, or cal Competition Policy”, the regulation on the Ger- whether they are outsourced to faraway countries, man telecommunication market shall be analysed such as China or India. A study for Baden-Wuert- from an economic perspective and be compared temberg showed that most resident firms are out- with regulations in other countries. sourcing their IT services to IT providers within the Productivity and innovation are essential eco- federal state. But it is still not clear to what extent the nomic aims on the firm level as well as on the sec- IT providers revert to advanced contributions from toral and the macroeconomic level. On the basis of abroad. Furthermore, the different forms of interna- firm-level data, we will analyse how different ICT- tionalisation are of interest. They can include ex- based firm strategies affect productivity and inno- ports, production abroad, participating in foreign vative capability. A further main interest is to what firms as well as partnerships with foreign distribu- extent ICT-producing and ICT-using firms and in- tors. In this research area we analyse which types of dustries differ with respect to their productivity and

59 Aims and Research Activities Information and Communication Technologies

their innovative capability. Thus, regulating aspects pects of the Skill Structure of Labor” at Constance Uni- shall also be taken into account for ICT-providing versity and ZEW. The part of this project carried out by sectors. These aspects correlate with the main re- the ICT research group focuses on the identification search area “ICT sector and diffusion of ICT”. of educational and particularly academic profiles that support entrepreneurship. We analyse which characteristics distinguish entrepreneurs from their em- Selected Research Projects ployed fellow students and which academic background of the entrepreneurs supports the success of Innovative Capabilities and the Role of Consultants start-up firms. The investigative approach is empiri- in the Information Economy cal; the econometric models to be estimated are de- The aim of the project is to assess, both theo- rived from established theoretical models. retically and empirically, whether consultants con- (http://www.zew.de/project521) tribute to innovative capabilities of firms. Thereby, the main focus is set on the abilities of firms to Internationalisation of the IT-Related Services make use of information and communication tech- Sector (INTERDIG) nologies for innovating their products, processes The research project INTERDIG focuses on the and organisational structures. In the interdiscipli- internationalisation of the IT-related services sector, nary approach, IT-based innovations are analysed as especially of IT service providers and software firms the result of the interplay of the knowledge and in- in Germany. The aim of the project is to develop terests of consultants, managers, and employees on specific recommendations for action for the firms in the one hand and of the cognitive and normative order to strengthen their competitiveness and ex- conditions of social innovation and learning process- pand their international presence on the basis of es on the other hand. well-founded research. Furthermore, the project re- (http://www.zew.de/project554) sults shall be transferred to service providers, relevant governmental institutions, and science by us- IT-Outsourcing, Competitiveness and Employment: ing adequate channels of knowledge transfer. Analyses Based on Firm-Level Data (http://www.zew.de/project536) The main purpose of this project is to analyse to what extent firms with IT outsourcing deviate from Interconnection and Competition Among Internet firms without IT outsourcing with respect to job cre- Service Providers ation and competitiveness. Moreover, we analyse This project analyses the network externalities the motives and determinants of the decision to present in the Internet and the effect these external- outsource. In order to explain potential differences ities have on the interconnection incentives of com- in employment between outsourcing and non-out- peting Internet Service Providers (ISP). The utility of sourcing firms, we also consider various indicators connecting to the Internet rises with the number of or- of competitiveness of firms, such as innovation and ganisations and individuals connected to the Inter- productivity measures. The empirical analysis entails net. The Internet is a classical example of a market statistical and econometric analyses based on rep- featuring significant positive network externalities. resentative data sources for Germany as well as se- ISP can internalise these positive external effects by mi-structured interviews with the persons respon- network interconnection and by developing stan- sible in firms supplying and procuring IT services. dards which make the applications provided on their (http://www.zew.de/project498) networks compatible across network boundaries. The present analysis focuses on the question whether Corporate Governance and Structures the presence of network externalities in the market for of Qualification in Higher Education internet services leads to inefficiencies in the com- This project is part of the DFG research group patibility choice of ISP in the free market processes in “Heterogeneous Labor: Positive and Normative As- such a way that government intervention into inter-

60 Information and Communication Technologies Aims and Research Activities

connection between ISP would be justified. Spitz-Oener, A. (2006), Technical Change, Job (http://www.zew.de/project565) Tasks and Rising Educational Demands: Looking Outside the Wage Structure, Journal of Labor Eco- nomics 24(2), 235-270. Selected Publications

Bertschek, I., H. Fryges, and U. Kaiser (2006), B2B or Not to Be: Does B2B E-Commerce Increase Selected Presentations Labour Productivity?, International Journal of the Economics of Business 13(3), 387-405. Cerquera, D. (2006), Dynamic R&D Incentives Bertschek, I. and U. Kaiser (2004), Productivity with Network Externalities, European Meeting of the Effects of Organizational Change: Microeconometric Econometric Society (ESEM), Vienna. Evidence, Management Science 50(3), 394-404. Häring, J. (2006), The Virtual Location of E-Tailers: Hempell, T. (2005), Does Experience Matter? In- Evidence from a B2C E-Commerce Market, Annual novations and the Productivity of ICT in German Conference of the European Association for Research Services, Economics of Innovation and New Tech- in Industrial Economics (EARIE), Amsterdam. nology 14(4), 277-303. Müller, B. (2006), Human Capital and Successful Hempell, T. (2005), What’s Spurious? What’s Re- Academic Spin-Off, Annual Conference of the Euro- al? Measuring the Productivity Impacts of ICT at the pean Association for Research in Industrial Firm Level, Empirical Economics 30(2), 427-464. Economics (EARIE), Amsterdam. Schäfer, A., C. Spengel, and O. Jacobs (2004), ICT Schleife, K. (2005), Computer Use and the Em- and Profit Allocation Within Multinational Groups, In- ployment Status of Older Workers, Work Pensions tertax 6/7, 268-283. and Labour Economics Conference (WPEG), York. Schleife, K. (2006), Computer Use and Employ- Vanberg, M. (2006), Network Externalities and In- ment Status of Older Workers – An Analysis Based on terconnection Incentives, Conference on the Eco- Individual Data, LABOUR: Review of Labour Eco- nomics of Information and Communication Tech- nomics and Industrial Relations 20(2), 325-348. nologies, Paris.

Growth and Business Cycle Analyses Aims and Research Activities

Research Group “Growth and Business Cycle Analyses”

The research group unites the macroeconomic expertise present at ZEW. Although microeconomic and microeconometric research approaches are dominant at ZEW, each research department takes the macroeconomic perspective into account as well. The research group assumes cross-departmental functions and links this macroeconomically oriented research. The research group “Growth and Business Cycle Analyses” mainly focuses on three tasks: First, the group coordinates cross-departmental research projects, provided they are of primarily macroeconomic character. Second, it is responsible for the quarterly publication of “ZEW Wachstums- und Konjunktu- ranalysen” (“ZEW Growth and Business Cycle Analy- ses”). This publication is devoted to the transfer of macroeconomic research results to an interested public. Third, the members of the research group are contact persons for, e.g., the press with respect to questions concerning macroeconomic issues.

63 Aims and Research Activities Databases

Databases

ZEW has established several very important data- ■ ProgTrans/ZEW Transport Market Barometer bases that are regularly updated. Extracts from some ProgTrans (Basle) and ZEW (Mannheim) have de- of these databases can be made available to scien- veloped an indicator for the transport industry. tists for research work only (subject to data protec- This instrument makes systematic use of knowl- tion rules for individual data). edge from 300 experts in the German shipping and transport industry so as to evaluate the ■ Business Survey in the ICT-Related short-term development of transport volume and Services Sector transport prices on the transport markets. Four Quarterly survey of firms from German ICT-relat- times a year, they assess the development of ed and knowledge-intensive services sectors. volumes and prices in seven different transport Firms are asked for their current as well as their markets for the next 6 months. expected economic situation. ■ ZEW Energy Market Barometer ■ ICT survey Continuous prognosis of short- and mid-term Firm-level data on ICT diffusion based on a rep- developments based on expert surveys. Vol- resentative sample by manufacturing and serv- umes of energy demand and the corresponding ices sectors, firm size categories, and regions energy prices are assessed for different energy (East and West Germany); collected every two sources. years. ■ ZEW Financial Market Survey ■ Mannheim Enterprise Panel (MUP) This monthly survey displays the expectations This database covers all German enterprises in- and forecasts of experts for national and inter- cluding a description of their activities. It is used national financial markets’ developments and in order to select samples for surveys. the business cycle.

■✞ Mannheim Innovation Panels for the ■ ZEW Start-Up Panels Manufacturing Sector and Mining as well These panels include firm-level data for analysing as the Services Sector (MIP, MIP-DL) business start-ups, growth, and insolvencies. It is an annual survey on the innovation activities The panels contain information on about of the German manufacturing sector which is 5,900,000 firms in West Germany and 1,400,000 part of the Community Innovation Survey (CIS). firms in East Germany for the period from 1991 to This database is available to external re- 2006. The start-up panels also include firms from searchers. Austria.

64 Conferences and Workshops Aims and Research Activities

Conferences and Workshops

ZEW holds quite a number of conferences and 2005 workshops, allowing researchers to exchange ideas and information on recent research results. For in- ■ Workshop “Interaction Within the Family: stance, ZEW’s annual summer workshop is an op- Collective Approach and Bargaining Models” portunity for young scholars to present results of (http://www.zew.de/event450) their research work and discuss them with leading ■ “European Conference on Long-Term Care” economists who give lectures on the topic of the (http://www.zew.de/event425) workshop. On occasion, we jointly organise confer- ■ “2nd ZEW Conference on Economics of ences with foreign institutions. Innovation and Patenting” Information on this kind of activities can be (http://www.zew.de/event495) found on http://www.zew.de/allevents. ■ Conference “Heterogeneous Labour and An overview of events held in English of recent Education” years is given below: (http://www.zew.de/event494) ■ “5th ZEW Conference on the Economics of 2006 Information and Communication Technologies” (http://www.zew.de/event391) ■ “Workshop on Internet Policy” ■ Summer Workshop “EMU Enlargement” (http://www.zew.de/event613) (http://www.zew.de/event434) ■ “ACE 2006 – 4th Conference of the Association ■ “LoWER Annual Conference 2005” of Competition Economics” (http://www.zew.de/event426) (http://www.zew.de/event560) ■ Workshop “Education and Training: Markets ■ Conference “Relation Between Financial and Institutions” Markets and Monetary Policy – Deutsche (http://www.zew.de/event407) Bundesbank and ZEW” (http://www.zew.de/event617) 2004 ■ “3rd Conference on Policy Evaluation” (http://www.zew.de/event519) ■ Workshop “German Research Foundation (DFG) ■ “Workshop on ICT and Firm Strategies” Priority Program: Interdisciplinary (http://www.zew.de/event539) Entrepreneurship Research” ■ Summer Workshop “EU-Countries in Fiscal (http://www.zew.de/event299) Competition” ■ “2nd Conference on Evaluation Research” (http://www.zew.de/event535) (http://www.zew.de/event375) ■ Conference “Wage Growth and Mobility: Micro-, ■ Workshop “European Unemployment: Recent Macro- and Intergenerational Evidence” Developments in Duration Analysis Using (http://www.zew.de/event528) Register Data” ■ Conference “Economic Growth in Europe” (http://www.zew.de/event376) (http://www.zew.de/event522) ■ “4th ZEW Conference on the Economics of ■ “Workshop on Firm Exit and Information and Communication Technologies” Serial Entrepreneurship” (http://www.zew.de/event303) (http://www.zew.de/event502) ■ Workshop “Education and Wage Inequality in Europe” (http://www.zew.de/event275) ■ Summer Workshop “The Management of Global Commons” (http://www.zew.de/event268)

65 Aims and Research Activities Conferences and Workshops

Heinz Koenig Young Scholar Award Laureates 2005

Named after the late ZEW founding research di- ■ Uwe Böwer, Munich University (LMU), „An rector Prof. Dr. Dr. h.c. Heinz König, the award is Empirical Analysis of Stochastic Trends and meant to acknowledge outstanding empirical work Cycles in Central and Eastern Europe and the of young economists. The award consists of a prize Euro Area” of 5,000 € and also includes a three months’ residential fellowship at ZEW. The winner is announced at the end of the ZEW Summer Workshop. 2004

■ Wolfram Schlenker, Ph.D., University of 2006 California, San Diego, “Nor Any Drop to Drink: Climate Change and the Future of Irrigated ■ Benny Geys, Ph.D., Social Science Research Agriculture” Center Berlin (WZB), “Looking Across Borders: A Test of Spatial Interdependence Using Local Government Tax Efficiency Ratings”

ZEW Summer Workshop Participants 2006

66 ZEW Doctoral Studies Network & ZEW Visiting Researchers Programme Aims and Research Activities

ZEW Doctoral Studies Network and ZEW Visiting Researchers Programme

ZEW Doctoral Studies Network ernment ministries and the European Commission, its research work also makes it a competent discus- ZEW has always accorded high priority to the sion partner within the scientific community. qualification of its staff. The first career move for tal- ZEW is pleased to see even more doctoral stu- ented young researchers – most of whom start dents contribute new ideas to the further development of its own research work. By means of the ZEW DocNet, the institute anticipates gaining access to new resources in the acquisition of talented researchers for the institute’s research work and, at the same time, is proud to engage beyond its current practice even further in the fostering of scientific careers in the German and European research land- scape. working at ZEW directly after graduating from a uni- (http://www.zew.de/en/kooperationen/zewdocnet) versity – is a doctoral degree. This route to a doctoral degree has grown in importance to such an extent that ZEW is now endeavouring to further increase the support it provides to its doctoral stu- ZEW Visiting Researchers Programme dents. With this aim in mind, the institute has initiated the ZEW Doctoral Studies Network (ZEW Doc- ZEW, in cooperation with associated university Net) and concluded cooperation agreements with faculties, wants to intensify the involvement of inter- the Universities of Mannheim, Constance and national scholars in its research activities. Accord- St. Gallen. It is envisioned that the ZEW DocNet will be expanded to particularly include university- based doctoral programmes in EU partner countries in the years ahead. ZEW offers young academics the opportunity to take part in scientifically demanding and applied research projects during the course of which they are ingly, ZEW launches a specific programme which ad- able to acquire sound continuing professional de- dresses well-established as well as young and prom- velopment which will provide them with an out- ising researchers. ZEW invites suitable candidates standing launching pad for a career in the academ- for visiting periods of several weeks at the institute to ic or business world, in government ministries, and pursue leading research at the fore of international sci- organisations. The network ensures that doctoral entific excellence. The first and foremost characteris- students receive supervision of their dissertations in tic of this programme is the immediate involvement of the course of their work at ZEW. Doctoral candidates the visiting fellows in ZEW’s research activities. Short work with experienced ZEW staff members and with visiting periods of a few days are of course highly national and international cooperation partners on welcome as well, yet are not the subject of the ZEW what are mostly internationally focused projects. Visiting Researchers Programme. ZEW is in a promising position to fulfil its role (http://www.zew.de/en/kooperationen/zewvisiting) of passing on sound skills in applied empirical economic research: The institute’s economic counselling services are not only frequently requested by gov-

Activities of the Service Departments

Aims and Research Activities

Information and Communication Aims and Research Activities

Information and Communication

Knowledge transfer is of high importance to ZEW. Knowledge Transfer by Publications and The institute engages in various activities to inform Electronic Media firms, politicians, and the administration, the scientific community, organisations, and the public in gen- In addition to publishing in national and inter- eral about its research work. In this context, it is the re- national scientific journals as well as participating in sponsibility of the Information and Communication current political and economic debates by contri- service department to prepare press releases and ar- butions in print and electronic media, ZEW also in- ticles on ZEW’s research results, to establish contacts forms about its research results in its own publica- between ZEW researchers and print and electronic tions and via the Internet: media, to continually update ZEW’s website, and ed- it, produce, and archive ZEW’s own publications. ■ Publication Series The Information and Communication department Among the book series edited by ZEW, the “ZEW is also involved in the organisation and promotion of Economic Studies” are published in English. They ZEW lecture series as well as annual events, such as are monographs on theoretical, empirical, and the “ZEW Wirtschaftsforum” (“ZEW Economic Fo- methodological problems in economics. The rum”) or the ZEW Summer Workshop. Furthermore, it series in German are called “ZEW Wirtschafts- is responsible for the presentation of ZEW and its re- analysen” and “Umwelt- und Ressourcenöko - search activities at national and international con- nomie”. ferences and meetings of economists. Moreover, the Information and Communication service department ■ Working Papers is in charge of ZEW’s specialist library as well as the (to be downloaded from the Internet) design and distribution of ZEW media.

From left to right: Romy Weiland, Yvonne Bräutigam, Yvonne Lupp, Maria-Inti Metzendorf, Nicole Karle, Kerstin Heres, Shalini Saxena, Katrin Voß, Gunter Grittmann, Erich Dichiser

71 Aims and Research Activities Information and Communication

ZEW Discussion Papers the following publications are only available in Discussion papers (nearly all of them in English) German. provide information on recent ZEW research for the scientific community. They are intended for ZEWnews/ZEWnews English edition publication in national and international scien- ZEWnews contains general information on current tific journals. research results, ongoing activities, and recent publications as well as dates of ZEW events. The ZEW Dokumentationen German edition is published ten times a year. It reg- Non-technical analyses and surveys on selected ularly contains specials on: Stock Options, Energy economic topics, mainly in German. Markets, Innovation Activities of the German Man- ufacturing and Service Industries, Mergers and Ac- quisitions. ZEWnews English edition is published ■ Publications for the General Public/ quarterly. Twice a year, it contains a special on Publication of Survey Results Stock Options. (to be downloaded from the Internet) With the exception of ZEWnews English edition ZEW Wachstums- und Konjunkturanalysen and ZEW Financial Market Report Switzerland, In this periodical, ZEW publishes quarterly analy-

72 Information and Communication Aims and Research Activities

ses of macroeconomic topics as well as forecasts and job offers, scientific conferences and work- by European research institutes on business de- shops as well as expert seminars for the profes- velopments in their respective countries. The pe- sional training of employees from enterprises, riodical also contains the main results of a quar- banks, and administration. Visitors interested terly ZEW survey on current and anticipated de- in special subjects may find the topic-related in- velopments in the ICT-intensive services sector. formation platforms of ZEW’s website extremely helpful. ZEW Finanzmarktreport/ZEW Financial Market Report Switzerland Monthly reports presenting the current results of ■ ZEW Newsletter the ZEW Financial Market Surveys in Germany and The monthly ZEW Newsletter is only available in Switzerland with assessments and expectations by German. It is sent to its subscribers by electron- financial experts regarding developments on na- ic mail and contains news from ZEW, such as in- tional and international financial markets. The formation on the latest press releases, on new ZEW Finanzmarktreport also contains the month- publications and research projects, on events, on ly published ZEW Indicator of Economic Sentiment job offers, and on interesting links on the Internet. providing information on the current situation and future development of the economy in Germany and the Eurozone. Lecture Series and Special Events

ZEW Branchenreport Innovationen For the discussion of current economic prob- Annual reports on the innovation activities in 21 lems, ZEW organises a few distinct lecture series and sectors of manufacturing and service industries an annual conference. Several times a year in based on the ZEW innovation survey. “Wirtschaftspolitik aus erster Hand” (“First-Hand Economic Policy Issues”), a distinguished repre- ZEW Branchenreport Dienstleister der sentative of the German economy or a politician is Informationsgesellschaft invited by ZEW to provide an insight into current A quarterly report on current and anticipated de- economic developments and practical policy issues. velopments in the ICT-intensive services sector. In the lecture series “Mannheimer Wirt schafts- und Währungsgespräche” (“Mannheim Talks on Mone- ZEW Gründungsreport tary Issues”), which is organised three times a year This biannual report contains the findings re- by ZEW in cooperation with the University of garding start-up activities in Germany. Mannheim, the banks’ association of the Rhine- Neckar region, and a regional academy, CEOs of fi- ZEW Jahresbericht nancial institutes give lectures on developments in ZEW’s annual report presents the institute’s per- the banking sector. The annually organised “ZEW formance in the previous year with an emphasis Wirtschaftsforum” (“ZEW Economic Forum”) is a on ongoing and completed research projects as one-day conference that serves as a forum for en- well as activities of the service departments. trepreneurs and representatives of business associations and state institutions to discuss current political economic questions. On this occasion, pa- ■ ZEW on the Internet pers are presented by prominent representatives of (www.zew.eu/en) politics and economics from Germany and abroad. ZEW’s website provides information on ongoing and completed research projects, ZEW publications and research reports, statements and press releases on current economic topics, ZEW staff

73 Aims and Research Activities 2006 EU-Affairs Office

EU-Affairs Office tist to exchange their experiences with regard to framework programme proposals. Besides, the sci- More than 40% of the ZEW funding comes from entists are informed on current calls and tenders third-party funds. With more than 200 running proj- which complement the offer of information provid- ect at ZEW, the EU represents by far one of the ed electronically and on the intranet. most important contracting parties. Proposals sub- Also part of the EU-affairs office’s working field mitted within the EU framework programme, how- is the revision and negotiation as well as the coun- ever, need intensive assistance and preparation selling of research contracts and agreements. As EU due to the complex requirements of the pro- projects often require the participation of partners gramme. This support is supplied by the EU-affairs from different EU member states, it is important to office. Therefore, one of the major tasks of the EU- conclude consortium agreements covering impor- affairs office is to inform and consult the scien- tant aspects like intellectual property rights and li- tists of ZEW with regard to calls and tenders of the ability which have to be negotiated by the EU-affairs EU and to support them with administrative and le- office. During the time of proposal writing usually gal issues. Furthermore, assistance is provided to confidentiality agreements or other pre-contractu- the scientists by simplifying and optimising inter- al agreements have to be developed or revised. nal procedures especially with regard to the high re- This is also done by the EU-affairs office. quirements of the EU towards project management In order to actively take part in EU research pol- and the coordination of EU projects. icy by participating in, e.g., consultation proce- Another field of work of the EU-affairs office dures of the European Commission, EU research consists of the conceptions and the implementa- policy needs to be monitored. This is done by the tion of advanced training courses for ZEW staff and EU-affairs office as well by analysing and evaluat- external participants. Internal advanced training ing communications from the European Commis- courses constitute a good possibility for the scien- sion as well as Council decisions.

74 Knowledge Transfer & Qualification Programmes Aims and Research Activities

Knowledge Transfer & Qualification Programmes

Knowledge Transfer & Qualification gramme of continuing professional development events. ZEW is the only German economic research in- These training events combine the output of re- stitute which runs its own continuing professional cent research work with the lessons learned from development section, which aims at making the re- professional practice. The Knowledge Transfer and sults of the institute’s practice-related research work Qualification Programmes service department available to experts and managers in businesses collaborates with ZEW research departments and and institutions. The close cooperation between expert practitioners on the development of regular ZEW researchers and excellent practitioners facili- new training events, which deal with current topics tates soundly scientific and yet practice-oriented and issues. knowledge transfer and qualification. Seminars in Mannheim, Frankfurt/Main, and There are two components to ZEW’s offer. On Berlin are now complemented for the first time by the one hand, ZEW runs expert seminars and, on the extremely successful ZEW seminars in Zurich and other, provides specific further training for firms Brussels. From September 2006 onwards, a semi- and institutions. nar series on financial market econometrics will be held in Zurich. In Brussels, the seminars “Econo- metrics in Action – Introduction to Econometrics” Expert Seminars and “Economic Modelling Workshop 2007 – Eco- nomic Evaluation of Pension and Taxation” will be Expert seminars run by ZEW researchers and ex- included for the first time in the 2006/2007 semi- perienced practitioners are at the heart of our pro- nar programme.

From left to right: Valentin Schackmann, Axel Braun, Vera Pauli, Karin Schönfelder, Katrin Stratmann, Barbara Hey

75 Aims and Research Activities 2006 Knowledge Transfer & Qualification Programmes

Specific Training Programmes for so draw on an external network of outstanding speak- Firms and Institutions ers from the worlds of business and science. One special feature is the ZEW’s dual management train- The Knowledge Transfer and Qualification Pro- ing, in which ZEW speakers work with professionals of grammes service department works in close consul- the relevant client departments. Involving the client’s tation with the client on the development of specific own experts in running the seminar ensures that they corporate qualification programmes – in German and are relevant to participants’ day-to-day working con- in English. ZEW is not only able to commission the cerns and that the seminar design is ultimately tai- services of researchers working at ZEW itself, it can al- lored to meet the needs of the client company.

ZEW Expert Seminar

76 Organisation, Personnel and Finance

Aims and Research Activities

Organisation, Personnel and Finance Aims and Research Activities

Scientific Advisory Council

The Scientific Advisory Council accompanies and ■ Prof. Dr. Gebhard Kirchgässner, Swiss Institute evaluates the work at the ZEW. It is composed of rep- for International Economics and Applied Eco- resentatives from leading companies, universities, nomic Research (SIAW), University of St. Gallen research institutes and politics. ■ Prof. Dr. Kai A. Konrad, Director Research Unit Market Processes and Governance, Social ■ Chairman: Prof. Dr. Friedrich Buttler, Science Research Center (WZB), Berlin State Secretary retd., Regional Director for ■ Prof. Dr. Franz Luzius, CEO Chamber of Industry Europe and Central Asia, International Labour and Commerce Rhine-Neckar, Mannheim Organization (ILO), Geneva ■ Prof. Dr. Pierre A. Mohnen, UNU-MERIT, ■ Vice-Chairman: Prof. Dr. Dres. h.c. Arnold Picot, Maastricht University Chair at Institute for Information, Organization ■ Prof. Dr. Hermann Remsperger, Executive and Management, Munich University Board Member Deutsche Bundesbank, Frankfurt/Main ■ Prof. Dr. David Bruce Audretsch, Ph.D., Director ■ Prof. Dr. Dr. h.c. Dieter Sadowski, Economics Entrepreneurship, Growth and Public Policy, Director Institute for Labour Law and Industrial Max Planck Institute of Economics, Jena Relations in the European Community, Treves ■ Prof. Dr. Uschi Backes-Gellner, Institute for ■ Prof. Dr. Dr. h.c. Bertram Schefold, Strategy and Business Economics (ISU), Chair for Economics, esp. Economic Theory, Zurich University Frankfurt University ■ Dr. Kurt Bock, Board of Executive Directors ■ Prof. Dr. Bernd Schips, emeritus, former Direc- BASF AG, Ludwigshafen tor Swiss Institute for Business Cycle Research, ■ Prof. Dr. Christoph Engel, Executive Director Swiss Federal Institute of Technology Zurich Max Planck Institute for Research on Collective ■ Prof. Dr. Beatrice Weder di Mauro, Goods, Bonn Chair of Economics, Mainz University ■ Prof. Dr. Michael Heise, Director Allianz Group ■ Prof. Dr. Dietmar Wellisch, Chair for Business Economic Research, Dresdner Bank AG, Taxation and Public Economics, International Frankfurt/Main Tax Institute, University of Hamburg ■ Dr. Dieter Hundt, President Confederation of ■ Prof. Dr. Heinz Welsch, Department of Econom- German Employers’ Associations, Berlin ics and Statistics, Oldenburg University

79 Aims and Research Activities Organisation, Personnel and Finance

ZEW Permanent Visiting Scholars

Permanent visiting scholars and research professors are very important to the ZEW. Professors from German and international universities work together at ZEW as managers of research projects and, thus, make a notable contribution to keep the institute’s work in line with the latest scientific research, and additionally provide interesting impetus for the ZEW. Moreover, they get involved in establishing and/or maintaining of ZEW research areas including third-party fundraising. In the reference period, the following permanent visiting scholars are working at the ZEW: ■ Prof. Bernd Fitzenberger, In the centre: Prof. Dr. Christoph Spengel at the Ph.D., Frankfurt University “Mannheimer Unternehmenssteuertag” ■ Prof. Dr. Ulrich Kaiser, University of Southern Denmark, Odense ■ Prof. Dr. Kornelius Kraft, University of Dortmund ■ Prof. Dr. François Laisney, University Louis Pasteur, Strasbourg ■ Prof. Dr. Andreas Lange, University of Maryland ■ Prof. Dr. Michael Lechner, University of St. Gallen ■ Prof. Dr. Reinhold Schnabel, University of Duisburg-Essen ■ Prof. Dr. Christoph Spengel, University of Mannheim Prof. Dr. Ulrich Kaiser at the “ICT Conference”

80 Organisation, Personnel and Finance Aims and Research Activities

Personnel and Finance

As in previous years, the performance of ZEW’s This total number has been increased by 21 em- research and service departments could be en- ployees compared to the previous year. In addition, hanced notwithstanding the increased competition. many national as well as international visiting re- Once again, ZEW could assure both its national and searchers were integrated in ZEW’s work with the international position as one of the leading institu- aim of project cooperation and exchange of infor- tions of applied empirical economic research. mation and experience. In order to extend our in- In 2006, 149 employees have been working at ternational networking, in 2006 the ZEW Visiting ZEW; among them are 105 scientists (see Chart 1). Researchers Programme was founded. Further international cooperation is performed by involving ex- 1 ZEW Staff ternal cooperation partners in our projects. Charts 4

149 152 (135.3) (136.4) 2 Third-party funds by client/sponsor 127 128 (110.2) (110.1) Foundations 13% Firms/ Associations 14% 105 108 84 DFG* 11% German Federal 84 (98.8) (98.9) (75.3) (73.7) States 1%

41 42 41 40 2234 German Federal Scientific Staff Apprentices Government EU/International 25% Partners 36% Non-Scientific Staff In brackets: personnel in full-time equivalents. Total: 6.19 Mio. EUR. Status: June 2007. *German Research Foundation

3 Financing

70% Share in %

60% 59% 54% Institutional Sponsorship 50% 50% 50% 49% 49% incl. pact funds of Leibniz 50% Association (WGL)

46% 46% 40% 44% Third-party funds 42% 42% 40% and other income 35% 30%

20%

10% 8% 9% 6% 6% 6% Reserves 4% 5%

0% 97/98 '99 '00 '01 '02 '03 '04 '05 '06 '07

81 Aims and Research Activities Organisation, Personnel and Finance

and 5 give an outline of ZEW’s distinctly national and party funds at the national and international re- international networking. search market became more challenging. For sever- ZEW’s financial situation repeatedly reveals a al years now, the proportion of third-party funds (in- positive overall picture that is to be particularly as- cluding other income) has constantly been over 40% sessed as eminent since the competition for third- (see Charts 2 and 3).

4 International Cooperation

Others United Kingdom Bulgaria 18 18 Estonia Czech Republic Portugal 3 Israel Poland 3 France 3 Luxembourg 16 3 Lithuania Ireland 3 Malta Hungary 4

Norway Greece 5 11 Belgium

Sweden Finland 5 5 Slovakia Denmark 11 Netherlands 7 Slovenia Austria 8 11 Thailand United States 8 8 Switzerland Spain Italy

5 International Visiting Scholars at the ZEW

Others Bulgaria France 11 Estonia United States Sweden 3 Israel 4 28 Austria Lithuania 4 Norway Malta 4

Norway Belgium 4 Sweden 5 Spain 12 United Kingdom Slovakia 6 Slovenia Canada 7 10 7 Thailand Netherlands Switzerland Italy

L 7, 1 · 68161 Mannheim P.O. Box 103443 · 68034 Mannheim Germany Phone: +49/(0)621/1235-01 Fax: +49/(0)621/1235-224 E-mail: [email protected] Internet: www.zew.eu/en