Latest Press Releases

Under the new own resources decision, the EU has secured an entitlement to financial contributions from its Member States until 2058, which it does not even remotely need to finance the coronavirus recovery plan. A new study by ZEW quantifies this excess cover at ten times of what would actually be needed to repay the debt from the coronavirus recovery plan totalling 750 billion euros.

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EU Member States have agreed on a reform of the Common Agricultural Policy (CAP). After almost two days of negotiations, the Member States have approved a compromise proposal made by the German presidency of the Council of the EU. Professor Friedrich Heinemann, head of the Research Department “Corporate Taxation and Public Finance” at ZEW Mannheim, comments on this matter.

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Childcare provision is the most frequently suggested measure to mitigate the “child penalty” for mothers, who often bear financial losses after having a child, usually in the form of declining incomes. The pay gap between men and women begins to widen after the birth of the first child. The differences in pay result in major consequences for lifelong labour earnings and pensions as well as a higher risk of poverty for women. ZEW economist Michaela Slotwinski and a team of researchers examined this relationship more closely. The lack of daycare places is perceived to be the greatest obstacle preventing mothers with small children from working at all or working more hours and is the reason why family incomes often decrease after the birth of the first child.

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In the October survey (6–14 October 2020), the CEP indicator rose by 5.6 points to a new level of 50.0 points. This marks a new record high of the indicator since the survey began in mid-2013. Although the increase is slightly lower than in the previous month, when the indicator jumped by 18.3 points, optimism regarding the Chinese economy is still growing quite strongly. The CEP indicator, based on the China Economic Panel (CEP) in cooperation with Fudan University, Shanghai, reflects the economic expectations of international financial market experts for China on a 12-month basis.

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Corporations with well-established digital infrastructure are using this for more aggressive tax planning in contrast to corporations with little digital know-how. What this means is that these corporations can relocate their company-wide profits more efficiently to European countries with low tax rates and are therefore able to reduce their effective tax rate, as a joint study conducted by ZEW Mannheim and University of Mannheim suggests. “The profits declared by subsidiaries of international companies are higher in those countries where tax rates are lower. This correlation is more distinct among businesses with digital infrastructure, for example, enterprise resource planning (ERP) systems which companies use to plan, control and manage their resources,” says Christopher Ludwig, a researcher in the ZEW Research Department “Corporate Taxation and Public Finance” and co-author of the study.

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German education policy has so far been strongly federalist. The ministers of education have now concluded a state-level agreement to improve the comparability of school-leaving certificates and examinations, which will be presented to the minister presidents of the federal states. This decision is in line with the key results of a survey conducted by ZEW Mannheim between May and July 2020 among state parliamentarians in all 16 German states. According to the survey, the majority of the interviewed state parliamentarians (87 per cent) consider the comparability of student performance to be important. At 76 per cent, the majority of the respondents also support the reform proposal to introduce regular comparative tests. In addition, most of them would like the federal government to contribute more to the costs of education.

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A recent study conducted by ZEW Mannheim together with the University of Basel and the University of Malmo has found that the right of foreigners to vote affects integration: immigrants’ likelihood of acquiring citizenship changed when they previously had the chance to participate in an election as non-citizen residents. The specific effect of voting rights on naturalisation differed depending on the level of socioeconomic development in foreign residents’ particular country of origin.

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World Trade Organization (WTO) mediators have decided that the EU can apply tariffs on US imports. The decision was taken after the USA granted unlawful subsidies to aircraft manufacturer Boeing. Professor Friedrich Heinemann, head of the Research Department “Corporate Taxation and Public Finance” at ZEW Mannheim, comments on this matter:

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The ZEW Indicator of Economic Sentiment for Germany declined very sharply in the current October 2020 survey, plummeting 21.3 points to a new reading of 56.1 points. By contrast, the assessment of the economic situation in Germany improved again, and currently stands at minus 59.5 points, 6.7 points higher than in September.

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The 2020 Nobel Prize in Economics has been awarded to the US economists Paul Milgrom and Robert Wilson for their contributions to auction theory. Professor Achim Wambach, president of ZEW Mannheim, comments on this matter.

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