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Retirement at 69 –
a Matter of Reason and Fairness
German Economy Continues
to Show Unexpected Strength
Enrollment Fees:
Australian Model Facilitates Financing
Presentation of the Joint Economic Forecast
to the Society of Friends and Supporters
Berlin Office Active for RWI
in Three-fold Mission
No. 2/2011
Editorial
Retirement at 69 –
Das
Sparpaket
darf and
nichtFairness
auseinanderfallen
a Matter
of Reason
and prepared a statement (www.sachverstaendigenratwirtschaft.de). One of the recommendations for action
contained in the statement addressed to policymakers
was to gradually raise the statutory retirement age to
69 by the year 2060. Persons born from 1991 and later
would thus be affected by this change.
The publication of this statement resulted in reactions that were heated in part. SPD General Secretary
Andrea Nahles refuted the “reading of tea leaves for
2060”, calling it dubious, and claimed that it was
“nothing but a pension cut”. Some articles pointed
to the much-cited example of roofing installers who
at the age of almost 70 would still have to be able to
climb around on roofs.
The German population is growing older while tending to become healthier. That is very good news. At
the same time, fewer children are being born than are
elderly dying, which is leading to a population decline.
That is not very good news, however. In their impact
on the social systems, the two effects will mutually
reinforce one another, confronting the Statutory Retirement Pension scheme with tremendous problems
in the future, as a dwindling number of contributors
will have to fund pension benefits paid out for an increasingly longer period.
We members of the Expert Advisory Board to Assess
Overall Economic Development (SVR) have recently
investigated, on behalf of the federal government,
these “Challenges Posed by Demographic Change”
2 RWI News 2/2011
That reaction is wrong, for two reasons. First, the
SVR statement proposes, with regard to retirement
age, a review of special solutions for certain professions. Second, the long-term consequences of major
pension policy decisions unfortunately do not allow
us time until 2060 to decide on a general response to
the fact of ever-increasing life expectancy.
If the retirement age of 67 were maintained after
2030, contribution rates would have to be increased
considerably in order to prevent a funding collapse.
On the other hand, don’t employees already have to
bear a relatively heavy burden in social contributions?
Instead, it would seem only fair to split the gain in life
expectancy between a prolonged employment phase
and retirement – at a ratio of 2:1, for example. Once
we have agreed in principle on a similar compromise,
all other special cases could also be resolved by consensus. At any rate, acting as if there is no such thing
as demographic change is no solution at all.
Christoph M. Schmidt
Christoph M. Schmidt
Research News
German Economy
Continues to Show
Unexpected Strength
RWI is revising its economic cycle forecast upward, now
expecting the German economy to grow by 3.7% this year,
after a March forecast of 2.9%. In the meantime, domestic demand is driving growth more than demand from
abroad. For 2012, RWI is expecting the GDP to increase
at a less vigorous rate of 2.3% as a result of investment
activities losing momentum. At the same time, foreign
trade is expected to account for a smaller share of growth.
The job market will probably continue to expand, albeit at
a slower rate in the coming year. The situation of public
budgets will probably also improve considerably during
the forecast period. On the other hand, the repercussions
of the financial crisis continue to represent a substantial
risk for the business cycle in Germany.
The German economy continues to experience a
vigorous upswing. During the first quarter the seasonally adjusted figure for real gross domestic product
increased by 1.5% over the previous quarter, and indicators are suggesting an additional increase for the
current quarter. While foreign demand continues to
contribute to growth, domestic demand has come to
play a more dominant role. Private consumption expenditures increased at a constant, but not especially
high, rate. Investments, both in equipment and buildings, were the major drivers of economic expansion.
Building investments in particular benefit from the
unusually low real interest rates, a consequence of the
ECB’s expansionary monetary policy as well as of the
reputation of German capital market securities, which
foreign investors regard as a safe haven.
Early indicators would suggest that growth will come
to a halt during the second half of the year. The volume
of orders received continued to increase at a noticeable
rate until most recently, and the mood among businesses is still very optimistic when compared over the
long term, even though recent surveys reveal a slight
downturn. The increases will probably be smaller than
in the first quarter, however. This has already become
evident considering that the first quarter benefited
from several special factors, among them renewed
building activity, which began (in a manner untypical
for the season) in February and March and partially
made up for the loss in construction production that
had resulted from the early onset of winter in December
2010. Another factor was the Easter holidays, which
came exceptionally late this year and consequently
did not have an effect on economic activities during
the first quarter.
In addition, the global economy has in the meantime
lost momentum. Japan’s short-term production losses
in the wake of the earthquake have probably played a
certain role in this development. Beyond this, a number
of emerging countries have in the meantime recognized
the threat of an overheating economy and responded
with a more restrictive economic policy. Considering
these developments, foreign demand is expected to
grow at a slower rate than previously seen. Domestic
demand, in contrast, is expected to grow at a strong
and stable rate, and will probably continue to be stimulated by real capital market interest rates, which are
expected to have an expansionary effect in Germany,
despite any further cautious interest rate hikes by the
ECB. The proportion of disposable income will probably
also grow at an accelerated rate, spurred by expected
further growth in employment, a sharper rise in actual
earnings and an improved profit situation. Based on
this scenario, the upward trend in private consumption expenditures is likely to persist, while investment
activity will also continue at an elevated level, even if
the growth rates seen recently cannot be maintained.
In sum, we expect real GDP to grow by 3.7% in 2011.
Labor shortages fuel wage and salary increases
Considering the rising production levels, a continued
rise in employment levels is expected. The number of
persons in employment is predicted to grow by an
average of 1.2% for the year as a whole. On the other
hand, a shortage of skilled employees is becoming
evident within certain sectors of the labor market.
This development probably accounts for the accelerated rise in wages and salaries, which is being seen
more for actual earnings than for wages based on
collective agreements, suggesting that companies are
RWI News 2/2011
3
Research News
Key figures of the forecast of June 2011
2010 to 2012; changes in relation to previous year in %
2010
2011s
2012s
3.6
3.7
2.3
0.8
1.6
1.2
0.5
1.7
1.1
1.9
1.3
1.3
6.0
9.0
5.7
10.9
12.9
7.3
Construction
2.8
6.5
4.5
Other investments
6.4
6.5
6.1
Change of reserves
(contribution to growth)
0.6
–0.3
–0.1
Domestic demand
2.4
2.7
2.0
Trade balance
(contribution to growth)
1.3
1.2
0.4
Exports
14.7
8.3
6.1
Imports
13.0
6.5
5.8
40
490
40
990
41
350
3 239
2 947
2 650
7.7
7.0
6.3
Gross domestic product (GDP)1
Final demand1
Consumption expenditures
Private
Households2
State
Investment expenditure
Equipment
Employed persons3, in 1000
Unemployed persons4, in 1 000
Unemployment
rate5, in
%
Consumer prices6
1.1
2.4
2.3
Unit labour costs7
–1.0
0.4
1.7
In billion Euro
–82
–34
–5
In % of nominal GDP
–3.3
–1.3
–0.2
Balance of payments9, in
billion Euro
141.4
141.0
157.0
Financial balance of the state8
Own calculations according to information from the Federal
Statistics Office, the Federal Bank of Germany and the Federal
Labor Agency. – 1 Adjusted for price changes. – 2 Including
non-profit private organizations. – 3 Domestic figuers. –
4 National differentiation. – 5 In differentiation of the Federal
Labor Agency. – 6 Consumer price index. – 7 Remuneration
per employee in relation to real GDP per employed person. –
8 In differentiation of the national income accounting. – 9 In
differentiation of the balance of payment. – S Own Estimate.
4 RWI News 2/2011
increasingly paying wage supplements. Yet the wage
and salary levels regulated by collective agreement
are also likely to see a strong hike in the coming year.
Unit labor costs will consequently rise at an accelerated rate. These developments lead us to expect, on
the one hand, a higher domestic inflation rate as well
as retarded growth in employment. Growth in domestic demand is likely to slow down in consequence.
In addition, exports will probably contribute less to
economic growth, since foreign demand is expected
to increase at a slower rate and Germany’s ability to
compete with international price levels will deteriorate somewhat. According to our estimates, real GDP
growth will slow down to 2.3% in the coming year.
Inflation, while expected to rise to a level of 2.4%
this year, will probably level off slightly to 2.3% in
2012. Whereas inflation this year will probably largely
result from increasing import prices, domestic inflation
will be the major contributing factor next year. This is
based on the assumption that the level of commodity
prices remains unaltered compared with previously
observed levels. With core inflation continuing to rise
during the forecast period, there is an imminent risk
of inflation pressure building up, which could prove
a threat to medium-term price stability.
Economic upswing brings additional revenues
to public budgets
The situation of public budgets is likely to improve
considerably during the forecast period. A substantial volume of additional revenues can be expected
on account of the economic upswing and of rising
inflation, while expenditures for social benefits will
probably decrease in the wake of economic growth.
Public debt is consequently expected to decline to a
level of 1.3% relative to the GDP this year and, further,
to 0.2% next year, which would represent an almost
balanced budget.
Thus, the German economy continues to show unexpected strong growth, and we are once more revising the forecast for 2011 upward. A major factor in
this development is the low level of real interest rates;
Research News
since introduction of the euro, rates have not remained for any extended period at a level comparable to
that recorded in the past eighteen months. However,
considerable risks are still threatening. The repercussions of the financial crisis are far from having been
absorbed. The eurozone continues to be troubled by
the high level of debt among many member countries,
while government debt in the United States has also
reached a dangerous level. An additional threat is the
supply of liquidity, which the central banks had broadly
expanded in response to the financial crisis but have
not yet reduced to any substantial degree. There is
consequently a significant danger of renewed excesses
and of rising inflation levels worldwide.
student loans, the ICL measures the monthly repayment
sum based on the subsequent income of the student
in question and may not exceed a fixed proportion of
his or her income. This prevents excessive financial
burdens on the graduates. It also reduces the number
of graduates who are unable to pay back their loans.
Models of this kind have been used successfully in
Australia and New Zealand for many years.
Information: [email protected],
[email protected]
West German university graduates
have the highest income
Enrollment Fees:
Australian Model
Facilitates Financing
Enrollment fees are reasonable, but it should be possible to finance them through special loans whose repayment is based on subsequent income. Student loans
of this kind, based on the Australian model, could also
be used extensively in Germany. This is the result of a
recent study conducted by the RWI and the Australian
National University. It shows that an “income-contingent
loan” considerably reduces the graduate’s perceived financial burden.
Giving German students a share in the expenses of
their studies by means of enrollment fees makes economic sense. In order to ensure efficiency and equality,
however, it should be possible to finance the enrollment
fees using special loans which are available to as many
students as possible and can be paid off easily. The
“income-contingent loan” (ICL) is a fee model which
possesses these attributes. A current study conducted by the RWI and the Australian National University
arrived at these findings. In contrast to conventional
A frequent argument against enrolment fees is that
the fear of being unable to pay back a loan taken out to
finance the fees or having to undergo severe financial
restrictions could deter many students from studying.
Income-dependent loans based on this ICL model would
be suited to assuaging this fear of potential students.
Enrollment fees of € 3,500 per year over a 5-year
period were assumed for the model calculations in the
study. This results in a total sum of € 17,500 to be paid
back within 10 years. The 2007 “Microcensus”, compiled
by the Federal Statistical Office, provided the information on the income conditions of male and female
graduates in West and East Germany. According to the
above census, male West German graduates earned
the most, on average, in 2007 (gross annual income:
€ 51,525), followed by male East German graduates (€
33,629), female West German graduates (€ 26,930) and
female East German graduates (€ 24,600).
The calculations indicate that, with conventional loans,
university graduates with an average income would
have to spend 7.8 to 14.1% of their gross income paying
off the loans in the first year of repayment. In lower
income groups, the burden would rise to up to 26.8%.
ICL: Installments should not amount to more than 8%
of the gross income
Unlike conventional loans, the repayments for incomedependent credits such as the ICL are based on income.
The repayment usually begins 2 years after graduation,
as long as a certain income has been reached by this
point in time. The maximum limit for the installments
RWI News 2/2011
5
Research News
is fixed as a proportion of income. As a rule of thumb,
not more than 8% of the gross income should be spent
on amortizing the loan. The state assumes default guarantees if students are unable to pay back their loans.
Based on this scenario, the repayment period would
amount to 7 to 12 years for graduates with an average
income or 11 to 22 years for the lowest income groups.
These findings are comparable with those of other
countries, such as Australia and New Zealand, where
income-dependent student loans have been successfully used for years.
This article is based on Ruhr Economic Paper #244
„Student Loan Reforms for German Higher Education:
Financing Tuition Fees“. You can find it as pdf-download at http://en.rwi-essen.de/publikationen/ruhreconomic-papers/.
Information: [email protected],
[email protected]
Procurement of Research Contracts
Impact Evaluation of the Electricity Access Roll Out
Program (EARP), Rwanda.
Commissioned by: IOB, Ministry of Foreign Affairs, Netherlands. Contact Person: Dr. Jörg Peters. Term: 3 years
Evaluation of Renewable Energy Activities in Indonesia.
Commissioned by: IOB, IOB, Ministry of Foreign Affairs,
Netherlands.Contact Person: Dr. Jörg Peters. Term: 3,5 years
Impact Evaluation of On-Grid Electrification in Urban
Mozambique.
Commissioned by: Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ). Contact Person: Gunther
Bensch. Term: 8 months
6 RWI News 2/2011
Hessen’s energy resource supply risk.
Commissioned by: State Statistical Office of Hessen.
Contact Person: Prof. Dr. Manuel Frondel. Term: 1 month
Cost-efficiency of hospitals at the federal state level.
Commissioned by: Verband der Ersatzkassen e.V. Contact
Person: Dr. Boris Augurzky. Term: 6 months
Events
Presentation of the Joint
Economic Forecast to the
Society of Friends and
Supporters
The Society of Friends and Supporters of RWI invited
the public to the presentation of the Joint Economic
Forecast for spring 2011 at the RWE Tower in Essen
on May 10. The head of the RWI Growth and Cycles
Division, Prof. Dr. Roland Döhrn, presented the most
significant findings of the report, voicing optimism in
the face of the continued upswing.
The members of the RWI Society of Friends and Supporters had the opportunity on 10 May 2011 to obtain
first-hand information about the results of the Joint
Economic Forecast for the spring of 2011. At the outset
Good prospects for prolonged upswing in Germany
In his presentation, RWI Growth and Cycles head
Prof. Roland Döhrn clearly pointed out the three risks
threatening the current global economic recovery: the
euro crisis and the crisis in public finances in Europe,
high prices on commodity markets and the growing
risk of inflation, and the earthquake in Japan and ensuing consequences. He referred to Germany’s economic
situation as unchanged and highly stable. Döhrn stated that there was a good probability of the upswing
continuing. Yet he added that finance policymakers
should nonetheless not take advantage of the sound
budgetary position to heap up more debt and should
avoid “clandestine” tax hikes.
of the event, RWI President Prof. Christoph M. Schmidt
extended his greetings to the guests at the RWE Tower
and provided information about recent activities at
RWI, including progress in construction (almost finished), appointments and doctoral graduates, as well
as current topics (the euro crisis, energy, demographic
change) and third-party-funded projects.
Afterwards RWI Growth and Cycles head Prof. Roland Döhrn presented the findings of the current Joint
Forecast. RWI is jointly commissioned, along with other
economic research institutions, by the federal government to prepare the economic forecast on a semi-annual basis. The title of the current report is “Upswing
Continues – European Debt Crisis Still Unresolved”.
RWI News 2/2011
7
News from Berlin
Berlin Office Active for
RWI in Three-fold Mission
The RWI Berlin office is on a three-fold mission in the
federal capital: aid in policy consulting, strengthen economic policy communication and deepen collaboration
with researchers. The Berlin team has been active in
these areas, in addition to completing research in their
respective areas of expertise.
Nils aus dem Moore from the RWI Berlin office during the
panel discussion on the topic of “Growth amid controversy”
held by the Konrad Adenauer Foundation
Policy consulting
One focus of the work is aiding RWI President Prof.
Christoph M. Schmidt as expert in the German Bundestag’s
commission inquiring into the topic of “growth, prosperity and quality of living”. In addition to sharing
in the efforts of the “Measuring prosperity” project
group, Nils aus dem Moore responded to a number of
requests to conduct background talks by members of
parliament and Bundestag staff as well as by researchers interested in the subject. A very different topic
led him to the Federal Ministry of Finance in May: As
part of the continuing education series organized by
the policy department, he gave a presentation entitled
“On the way to Maastricht 2.0? National financial policy
in Europe between coordination and subsidiarity”.
In early June, Dr. Tanja Kasten took part in the “Science
meets Parliament” event at the German Bundestag. At
the event, organized by the Liebniz Society, scientists
visit the offices of delegates to the Bundestag and their
staffs to discuss current research topics and develop
8 RWI News 2/2011
Prof. Manuel Arellano from Madrid spoke about econometric
methodology for panel data during the BeNA lecture series
contacts. Ms. Kasten presented to the staff of Christine
Scheel (responsible for SME policy in the Bündnis90/
Grüne Bundestag faction) the most recent analyses by
RWI on the question of “Who carries the state?”(RWI
Position no. 43). The distribution of tax and public fee
burdens across income brackets and household types
was discussed on the occasion, as were options for
reforming the social security contribution scheme for
low wage-earners.
Economic policy communication
In early April, the newspaper Handelsblatt published
a series of six features, each encompassing several pages, entitled “Germany Unadorned”. The series dealt
with the challenges facing the German economy and
the prospects for the future. RWI was commissioned
as the collaborating research partner to contribute figures and supporting analyses. Nils aus dem Moore
was responsible for coordinating the project. Parallel
News from Berlin
to the series, the RWI analyses appeared in the RWI
Positions series, which was redesigned for the occasion (refer to page 11). In the context of the series a
“Germany Dinner” with a panel discussion featuring
prominent speakers was held by Handelsblatt at Hotel Adlon. Dr. Ronald Bachmann and Nils aus dem
Moore took the opportunity to establish contacts and
strengthen existing ones.
Future prospects were also the topic at the conference
entitled “Will what worked yesterday work tomorrow
as well? Growth amid controversy” organized by the
Konrad Adenauer Foundation on April 7. Following the
introduction by CDU General Secretary Hermann Gröhe,
three keynote speeches by scientists were scheduled.
Nils aus dem Moore made a presentation on the empirical significance of growth for gainful employment
and social security and later participated in the panel
discussion focused on the tense relationship between
ecology and economy.
The BeNA lecture series attracted a large number of scientists
to Humboldt University
Cooperation with researchers
The lecture series by Prof. Manuel Arellano of Madrid, organized by the Berlin Network for Employment
Market Research (BeNA) with the involvement of Dr.
Michael Kvasnicka, was a tremendous success. The
three lectures and the research presentation, dealing
with econometric methodology for panel data, on
April 7 and 8 were attended by about 140 visitors to
Humboldt University. Those in attendance came from
each of Berlin’s universities, from numerous scientific
institutions in the region, numerous universities and
research institutions in Germany between Rostock and
Freiburg (as well as from Essen, of course) and from
other countries, including Finland, Spain and Belarus. A great many participants also took advantage of
the opportunity to discuss their own research issues
with Prof. Arrelano personally during the consultation hours offered. It was the seventh lecture series
organized by the BeNA association, of which RWI is a
member through the Berlin office. The main activity
of the association is the weekly Leibniz Seminar for
Employment Market Research, where members of
the institutions participating in the network as well
as exceptional junior researchers from Germany and
other countries present their research projects (visit
the website at www.arbeitsmarktforschung.net). Michael Kvasnicka, initiator of the network and reelected
chairman of the board of BeNA in December 2010, sees
the records set by the lecture series, both in terms of
number of participants and the many regions they
came from, as evidence that “our activities are regarded as an attractive platform for employment market
economists and researchers in empirical economics
throughout Germany and at the international level.”
RWI was represented at Humboldt University in
May once again. At the 11th Economic Symposium of
the Humboldt Economic Forum entitled “Outgrown?
Growth in Perspective with Sustainability”, Nils aus
dem Moore discussed the question “Economy – the
Key to Happiness?” with a panel of guests, including
Swiss economist Matthias Binswanger, Austrian philosopher Charlotte Annerl and environmental scientist
Roland Zieschank from the Free University of Berlin.
The discussion centered on new findings concerning
the relationship between economic growth, quality of
living and satisfaction, as well as on current efforts
toward improving prosperity measurement.
Information: [email protected],
[email protected]
RWI News 2/2011 9
Publications
Ruhr Economic Papers
Download at http://en.rwi-essen.de/publikationen/
ruhr-economic-papers/
(256) Frondel, M.
Modeling Energy and Non-energy Substitution – A
Survey of Elasticities
(247) Clausen, V. und H. Wohltmann
(257) Bauer, T. K., R. Flake und M. Sinning
Oil Price Shocks and Cyclical Dynamics in an
Asymmetric Monetary Union
Labor Market Effects of Immigration – Evidence from
Neighborhood Data
(248) Luhan, W. J., M. W.M. Roos und J. Scharler
(258) Keese, M.
An Experiment on Consumption Responses to Future
Prices and Interest Rates
Thrift y Wives and Lavish Husbands? – Bargaining
Power and Financial Dicisions in Germany
(249) Ehlert, C., J. Kluve und S. Schaffner
(259) Trax, M.
Training + Temp Work = Stepping Stone? – Evaluating
an Innovative Activation Program for Disadvantaged
Youths
Productivity and the Internationalization of Firms
– Cross-border Acquisitions versus Greenfield
Investments
(250) Behl, P., H. Dette, M. Frondel und H. Tauchmann
(260) Bauer, Th.K., S. Bender, A. Paloyo und
Ch.M. Schmidt
Choice is Suffering: A Focused Information Criterion
for Model Selection
Do Guns Displace Books? – The Impact of Compulsory
Military Service on Educational Attainment
(251) Giesen, K. und C. Schwarz
Trade, Wages, FDI and Productivity
(252) Beckmann, J., A. Belke und F. Dobnik
Cross-section Dependence and the Monetary
Exchange Rate Mode – A Panel Analysis
RWI Materialien
Download at http://en.rwi-essen.de/publikationen/
rwi-materialien/
(66) Augurzky, B., A. R. Reichert und M. Scheuer
(253) Heinrich, T.
Communication and Reputation in Procurement
Auctions – Some Empirical Evidence
(254) Brosig, J. und T. Heinrich
Reputation and Mechanism Choice in Procurement
Auctions – An Experiment
(255) Bredemeier, C. und H. Goecke
Sticky Prices vs. Sticky Information – A Cross-Country
Study of Inflation Dynamics
10 RWI News 2/2011
Faktenbuch Medizinische Rehabilitation 2011 (2011 Fact
Book on Medical Rehabilitation)
As part of the healthcare system, medical rehabilitation has the mission of helping the chronically ill
to participate in the life of society at large and to live
self-determined lives. This is accomplished by preventing, eliminating or improving functional disorders and
social impairments (i.e. disabilities, unemployability,
need for nursing care) arising from illnesses, or by deterring any substantial deterioration of the individual’s
condition. Rehabilitation consequently contributes toward employees being able to participate longer in the
world of work and toward avoiding early retirement
and the need for nursing care.
Publications
With this in mind, the 2011 Fact Book on Medical Rehabilitation is aimed at providing an overview of the
medical rehabilitation system in Germany, as well as
of its underlying principles and effectiveness.
(67) Augurzky, B., R. Gülker, S. Krolop, Ch.M. Schmidt,
H. Schmidt, H. Schmitz und St. Terkatz
Krankenhaus Rating Report 2011 (2011 Hospital Rating
Report) – the Fat Years are Over
A total of 12% of hospitals were in the “red” zone
in 2009 (i.e. running a high risk of insolvency), while
75% were in the “green” zone and the remaining
13% in between. The mean probability of defaulting
was 1.2%. Compared with 2008, when 14% of hospitals were in the red zone and only 69% in the green,
the economic situation has improved. The analysis is
based on a sample of 687 annual reports from 2008,
including a total of 1,035 hospitals, and 366 from 2009.
Statutory funding (pursuant to the KHG) was increased considerably in 2009, for the first time since 1995.
The increase has probably not averted the long-term
decline, however. Rather, the action was more likely
an anti-cyclical stabilization measure in response
to the financial crisis. Based on a figure of 10% of a
hospital’s revenues, considered necessary for annual
investments, an investment gap of 30 billion euros has
accumulated since 1991. Yet hospitals are filling that gap
to an increasing extent by investing their own capital.
RWI Positionen
Download at www.rwi-essen.de/positionen (only in
German)
RWI Positions nos. 42 to 46 were prepared to provide
research support for the Handelsblatt series “Deutschland ungeschminkt “(Germany Without Unadorned)
along with more detailed insights.
(42) Bachmann, R., C. Ehlert und Ch.M. Schmidt
Wir tschaf tsleistung, Wer tschöpfung und
Wachstumspotenziale in Deutschland (Economic
Performance, Net Product and Growth Potential in
Germany). 1 April 2011
Amid the joy over economic recovery in the wake of
the financial and economic crisis, it should not be overlooked that the German economy is facing tremendous
challenges. These include demographic change and
restructuring of the energy supply in addition to the
shift to the heightened importance of the globalized
world economy. This edition of RWI Positions distills
recommendations for action from a discussion of the
issues of economic performance, net product and
growth potential that is based on historical experience
and economic considerations.
(43) Beimann, B., R. Kambeck, T. Kasten und
L.-H.R. Siemers
Wer trägt den Staat? Eine Analyse von Steuer- und
Abgabenlasten (Who Carries the State? An Analysis of
Tax and Fee Burdens). 1 April 2011
In discussions of a “fair” system of taxation and public fees, the argument is often heard that in Germany
the “middle class” bears a disproportionate share of
the burden and “top earners” contribute too little to
financing public budgets. This edition of RWI Positions
submits to an empirical assessment the public perception
that burdens are unfairly distributed. In performing the
assessment, the predominant distribution of burdens in
2010 arising from direct and indirect taxation as well
as from social security contributions were estimated
by referring to representative microdata.
(44) B. Augurzky, S. Felder and A. Tinkhauser
Perspektiven des Gesundheitssektors: Wachstumsmotor
oder Milliardengrab? (Perspectives on the Healthcare
Sector: Growth Driver or Bottomless Pit?) 1 April 2011
The healthcare sector is an important driving force
in the economy. The demographic development, progress in medical technology and greater prosperity
have caused a disproportionate rise in healthcare
expenditures in recent decades. Many factors would
indicate continued growth: first, an aging population
has the effect of increasing expenses; second, progress
in medical technology results in growing demand for
RWI News 2/2011 11
Publications
healthcare services; and third, it can be assumed that
the share of individual income spent on healthcare
services will increase with growing prosperity. At
the same time, the number of individuals financing
the healthcare system is declining. Unless the status
quo changes, a substantial funding gap will be seen.
more geared toward consumers and investments in
shaping future society, as well as on questioning the
growing preponderance of funds spent as part of “social
budgets”. Finally, attention is devoted to the expected
consequences of demographic change, to explicit and
implicit public debt as well as to the closely related
issue of the sustainability of public finances.
(45) M. Frondel, N. Ritter and C. M. Schmidt
Die Kosten des Klimaschutzes am Beispiel der Strompreise
(The Cost of Climate Protection – Illustrated by Electricity
Prices). 1 April 2011
Since the beginning of the new millennium, electricity prices have gone in only one direction – up. The
main cause has been taxes as well as charges and fees,
set by law, which for the most part are motivated by
the urge to protect the climate. Without such charges
being introduced and gradually increased, there would
have been no increase in the cost of electrical power
for private households since 1998. This RWI Position
analyses the causes for the price hike by referring to
the example of a household with an annual electricity
requirement of 3,500 kWh. Special attention is paid to
fees earmarked for promoting alternative sources of
electricity such as solar power, which consumers are
required to pay as part of their electricity bills.
(46) N. aus dem Moore, B. Beimann, H. Gebhardt and
R. Kambeck
Der Weg zu nachhaltigen Finanzen: Weniger Soziales,
mehr Investitionen (The Path to Sustainable Finances:
Fewer Social Expenses and More Investments). 1 April 2011
How have government revenue and expenditures
in Germany changed over time in terms of scope and
structure, and how should the current situation be
judged? By posing these questions, this edition of RWI
Positions addresses the longstanding debate over the
“appropriate” extent of government involvement and
the issue of an “optimum” ratio of government spending GDP. The empirical analysis comes before the
evaluation, however. The RWI Position paper thus first
presents an overview of the structure and development
of government revenues and expenditures along with
the related funding problems. The paper focuses on
analyzing the relationship between social benefits
12 RWI News 2/2011
(47) H. Gebhardt, R. Kambeck and F. Matz
Der NRW-Haushalt für das Jahr 2011: Scheinerfolge bei
der Konsolidierung (The 2011 NRW Budget: Apparent
Consolidation Progress). 17 Mai 2011
A red-green minority government has been in power
in North Rhine-Westphalia for almost a year. In the
area of budget and financial policy, the supplementary
budget for 2010 must be regarded as a flop, since the
legislation was found to be unconstitutional by the
State Court of Constitution in a decision published on
21 December 2010. On May 18, the state legislature is
scheduled to vote on the state government’s budget
proposal for 2011. With expenditures amounting to
about 55 billion euros and revenues set at over 50 billion euros, 4.8 billion euros in net additional funding
will need to be borrowed in order to achieve a balanced budget. It is absolutely correct to use additional
tax revenues resulting from the improved economic
cycle for reducing the level of new debt. However, policymakers should simultaneously begin to downsize
the structural deficit in order to achieve a structurally
balanced state budget, as prescribed by the brake on
spending. Up to now, budget and finance planners
have responded inadequately to this comprehensive
need for consolidation. Instead, in keeping with the
idea of “preventive financial policy”, an expenditure
hike has been planned.
RWI Arbeitsbericht 2010
Download at http://en.rwi-essen.de/publikationen/
arbeitsberichte/ (only in German)
The RWI Annual Report for 2010, entitled “Well Prepared” (Gut gerüstet), has been published. The report
provides details of the institute’s business year and
research activities. The printed report is available at
the institute.
Internal
Jochen Kluve Appointed
to Chair at the Humboldt
University
Dr. Jochen Kluve, head
of the RWI Berlin office,
has been appointed to
the chair of Empirical
Labor Economics at
Humboldt University’s
School of Business and
Economics in Berlin. The
labor market expert has
been active for RWI as a
researcher since 2003.
He was head of the
Labor Markets, Population and Health research division at RWI from 2003 to 2008, and in 2007 he took
over leadership of the newly established RWI office
in Berlin. His research papers have been published
in peer-reviewed professional journals, including
the Economic Journal, Economic Policy, the Journal of
Applied Econometrics and Labour Economics. Jochen
Kluve took up teaching duties at HU Berlin during the
current summer semester, offering a course in methods
for evaluating economic policy measures.
RWI Receives “job and
family audit” Certificate
RWI in Berlin received the “job and family audit”
(audit berufundfamilie) certificate on 25 May 2011. As
holder of such a certificate, RWI pledges to further
enhance the transparency and visibility of existing
efforts toward promoting families and to support the
compatibility of job and family. Sabine Reinhard, head
of the Human Resources and Legal Division, General
Administration service division at RWI, accepted the
certificate on behalf of RWI from Peter Hintze, Parliamentary State Secretary at the Federal Ministry for
Economy and Technology. The official sponsors of the
“job and family audit”, an activity of the non-profit
organization Hertie Foundation, are Federal Family
Minister Dr. Kristina Schröder and Federal Economics
Minister Dr. Philipp Rösler. Besides RWI, nine other
institutes belonging to the Leibniz Society received
certificates.
An annual review is held to ensure the implementation in practice of the specific objectives and actions
defined in the audit procedures. Three years after the
Christoph M. Schmidt
Elected to Board of
Trustees of MPI Munich
RWI President Prof. Christoph M. Schmidt has been
elected as deputy chairman of the board of trustees of
the Max Planck Institute for Tax Law and Public Finance
in Munich. He has been a member of the board since
July of last year. The main focus of research at the interdisciplinary institute is national and international
taxation as seen from a legal and economic perspective. While the legal division does research in a wide
variety of topics related to business and tax law, the
economic division is concerned with research issues in
the areas of finance studies and fiscal policy.
RWI human resources head Sabine Reinhard accepted the
“job and family audit” certificate from State Secretary Peter
Hintze
certificate is initially awarded, a reaudit takes place
to verify the extent to which set objectives have been
reached and to define advanced objectives, which are
then agreed upon. The certificate is confirmed only for
companies and institutions successfully completing the
reaudit, and these may subsequently continue to display
the quality seal. Reviews are held every three years.
RWI News 2/2011 13
Internal
Presentation of the
RWI Scientific Advisory
Board
economics, with the results being published in journals such as the Journal of Econometrics, the Journal
of Human Resources, the Economic Journal and the
Review of Economics and Statistics.
According to the statute of RWI, the Scientific Advisory Board is intended to advise the institute on
scientific matters.
Prof. Till Requate (until 7 June 2011)
The board is made up of at least six and no more
than twelve internationally respected scientists or other
experts in one of the institute’s fields who are professionally active. The tasks are to supervise, advise on
and evaluate the scientific aspects of work performed
at the institute, as well as to evaluate the research
program, to prepare the report for the Administrative
Board and to promote the institute’s work. We introduced three previous members in the 1/2011 edition of
RWI News (Prof. David Card, Prof. Clemens Fuest, Prof.
Walter Krämer). The other three members, who have
since left the board after completing their terms, follow
here. New members were appointed to the Scientific
Advisory Board in June 2011. The new board will be
introduced in coming editions of RWI News
Prof. Michael Lechner (until 7 June 2011)
Michael Lechner has been
professor of Empirical Economics and Econometrics at the
University of St. Gallen since
1998. He is currently Managing
Director of the Swiss Institute
for Empirical Economic Research (SEW). Between 1985
and 1989, Michael Lechner
pursued studies at the University of Heidelberg and at
the London School of Economics and Political Science.
He completed his doctorate in Mannheim, where he
additionally qualified for university teaching. Lechner
has done research on a variety of topics, including the
evaluation of labor market programs, the labor market
in eastern Germany, econometric methodology, the labor market effects of sports activities, and population
14 RWI News 2/2011
Till Requate has held the
chair for Innovation, Competition Policy and New Institutional Economics at the University
of Kiel since 2002. Previously
he was professor of Macroeconomics at the University
of Heidelberg. There he was
head of the Interdisciplinary
Institute for Environmental
Economics and was speaker
of the post-graduate group for environmental and resource economics. He completed his doctorate at the
University of Bielefeld, where he additionally qualified
for university teaching. The focus of his research is environmental economics, experimental economics and
innovation economics. Among the journals in which
Requate has contributed articles are: Economics Letters, the European Economic Review, the Journal of
Public Economics, the Journal of Economic Dynamics
and Control and Experimental Economics.
Prof. Nina Smith, Ph.D. (until 7 June 2011)
Nina Smith is a professor at the Aarhus School of
Business and director of the
Centre for Research in Integration and Marginalization.
For many years she has been
a member of several advisory
commissions in Denmark (including the Danish Council of
Economic Advisors, the Danish Government’s Research
Commission and the Danish Social Science Research
Council). Her research primarily focuses on the labor market (labor supply, women, immigrants, the
Internal
poorly qualified), income inequality, income tax and
the social state. Nina Smith has published articles in
journals such as Economica, Oxford Economic Papers
and Applied Economics.
“What is the latest on ...”
...Peter Hohlfeld
Peter Hohlfeld has been
the head of the department
of Overall Macroeconomic
Balance and Business Cycle
Analysis at the Macroeconomic Policy Institute (IMK)
of the Hans Böckler Foundation since 2005. He was
active at RWI between 1993
and 2005 in the International
Economic Relations research
group within the Growth and Cycles division. Before
that Peter Hohlfeld had studied macroeconomics at
the University of Essen and subsequently worked in
the department of macroeconomics at Hamburgische
Landesbank in Hamburg, at the Institute for European
Economic Research of the University of Wuppertal and
as a staff member at the Ministry of Economics of the
federal state of North Rhine-Westphalia.
1. What did your work at RWI teach you that you can
apply in your present job?
Among other things, I was able to acquire the expertise
for business cycle analysis and forecasting. I became
familiar with and applied the various forecast methods
that I still find useful today.
2. What do you remember best about your time
at RWI?
The intense and yes, sometimes heated, discussions
about forecasts and especially about statements made
in response to policy recommendations. Not to forget a
number of legendary birthday parties.
3. How is what you are doing now different from
your work at the institute?
The work is the same at the core but has become more
complex and multi-faceted. At IMK I am responsible for
the forecast practically for all of Germany – except for
the labor market. The media contacts have also increased considerably.
4. In your opinion, what is the greatest challenge
that German research facilities will be faced with in
the future?
For some time we have been seeing a shift in the focus of
economic research institutes – DIW Berlin for example. The
original objective of being a purely academic institution
has apparently not provided the recipients of research,
particularly policymakers, with the expected benefits.
The institutes continue to face the challenge of acting
as a bridge between science and politics.
5. Which question would you like to answer?
Who could have imagined that the transition to greater
pluralism in the economic sciences would take place so
quickly at German universities?
RWI News 2/2011 15
RWI News
No. 2/2011 (June)
Publisher:
Rheinisch-Westfälisches Institut für Wirtschaftsforschung
Hohenzollernstr. 1 – 3
45128 Essen, Germany
Phone: +49–0201–8149-0, Fax: +49–0201–8149-200
[email protected]
www.rwi-essen.de
All Rights Reserved
Editor: Prof. Dr. Christoph M. Schmidt
Editorial office: Sabine Weiler (Fon -213), Joachim Schmidt
Layout: Julica Bracht, Daniela Schwindt, Benedict Zinke
Photos: berufundfamilie gGmbH, Julica Bracht, Christine Kurka,
Henning Lüders, Benedict Zinke
ISSN 1612-3581