Felix Kersting, Iris Wohnsiedler, Nikolaus Wolf, 11 July 2020

Max Weber famously hypothesised that the Protestant work ethic fostered modern economic development. Does religion matter for economic success? This column revisits Weber’s hypothesis in the context of 19th-century Prussia. Protestantism did not matter for savings, literacy rates, or income levels across Prussian counties after 1870. Instead, there are large differences between ethnic groups, likely due to ethnic discrimination. Nationalism must be taken into account to understand Weber’s writings.

Timo Mitze, Reinhold Kosfeld, Johannes Rode, Klaus Wälde, 22 June 2020

Confronted with a novel, aggressive coronavirus, Germany implemented measures to reduce its spread since March 2020. Requiring people to wear face masks in public places has, however, been a subject of controversy and isolating the effect of mask-wearing on the spread of COVID-19 is not simple. This column looks at the town of Jena and other German regions that introduced face masks before the rest of the country to see whether the requirement makes a difference in the number of new COVID-19 cases. Requiring face masks to be worn decreases the growth rate of COVID-19 cases by about 40% in Germany.

Thomas Plümper, Eric Neumayer, 11 June 2020

Is Covid-19 a ‘rich man’s disease’, as many citizens in poorer countries believe it to be? This column descibes how in Germany, infections began with individuals returning from skiing holidays. In the first phase of the pandemic, infection rates were higher in richer areas and lower in more socially deprived districts. In the second phase, the ability to socially distance oneself mattered more – an ability that is itself socioeconomically stratified. Richer districts are now seeing fewer new infections, and the initial safety advantage of more socially deprived districts has disappeared.

Richard Bluhm, Maxim Pinkovskiy, 06 June 2020

The prospect that BCG – a vaccine used primarily against tuberculosis – might offer protection from COVID-19 has become an understandably popular hypothesis. This column finds that hope misplaced. The authors exploit a natural experiment, overlaying the large difference in BCG vaccination rates with the large differences in COVID-19 infection rates between the former East and West Germany. They find that the differences are attributable not to BCG, but to the West’s copious commuter flow patterns and the fact that the epidemic arrived there first.

Nicola Fuchs-Schündeln, Moritz Kuhn, Michèle Tertilt, 30 May 2020

The COVID-19 crisis has hit women’s employment particularly hard, partly because the worst-hit sectors have high female employment shares, but also because schools and daycare closures have forced more mothers to leave their jobs. This column looks at Germany, where 26% of the workforce has children aged 14 or younger, and quantifies the macroeconomic importance of working parents. If schools and daycare centres remain closed as the economy slowly reopens, 11% of workers and 8% of all working hours will be lost to the labour market. Policies to restart the economy must accommodate the concerns of these families.

Pierre Cahuc, Jérémy Hervelin, 28 April 2020

It is widely believed that apprenticeships lead to better employment outcomes. This column presents the results of a field experiment conducted in France to show that apprentices do not perform significantly better than vocational students when they look for jobs outside the firm in which they trained. This means that the positive effects of apprenticeship on youth employment come from the retention of apprentices in their training firms. If the effectiveness of apprenticeship is the creation of better matches between labor market entrants and jobs, policies should focus more on the collaboration between schools and public employment services.

Tobias Hartl, Klaus Wälde, Enzo Weber, 14 April 2020

Containment measures have been in place in Germany since the middle of March in response to the COVID-19 pandemic. This column examines the impact of these measures on the spread of the virus. It finds a reduction in the growth rate of COVID-19 seven days after the implementation of the policies on 13 March and again eight days after the implementation of further measures on 22 March. 

Daniel Baksa, Zsuzsa Munkacsi, Carolin Nerlich, 12 April 2020

Ageing populations can transform the composition of an economy’s labour force and threaten the stability of its pension system. This column examines the possible effects of reversing the recent pension reforms adopted since the early 2000s. It appears that reversing past pension reforms would be very costly and would put a disproportionate burden on current and future young generations. Even without reversals, further reforms are needed to address the adverse macroeconomic and fiscal impact of population ageing.

Stephanie Ettmeier, Chi Hyun Kim, Alexander Kriwoluzky, 09 April 2020

The ongoing COVID-19 pandemic in Europe is severe and spreads economic uncertainty. This column explores the evolution of financial market participants’ expectations during the COVID-19 pandemic, estimating yield curves of bonds in France, Germany, Italy, and Spain. The authors carry out an event study to investigate the potential impact of European fiscal and monetary policy measures on these yields. The results suggest that policy measures must be large and coordinated on the European level, and that fiscal and monetary policy must act jointly to fight the pandemic’s negative economic consequences

Jörg Heining, Simon Jäger, Benjamin Schoefer, 08 April 2020

Many countries, especially in Europe, are characterised by shared governance institutions that grant workers formal authority in firms’ decision-making. This column uses a natural experiment: a 1994 reform in Germany that abolished worker-elected directors in certain new firms and permanently preserved them in others, to provide empirical evidence on the effects of shared governance. It finds that shared governance can lead to an increase in capital formation and discusses the mechanisms which may lead to this result.

Christian Merkl, Enzo Weber, 07 April 2020

The spread of COVID-19 and the ensuing drastic lockdowns are placing economies and labour markets worldwide in a state of emergency. Governments are struggling to safeguard jobs and firms. Short-time work and comprehensive liquidity support for businesses and the self-employed are some measures being used. This column illustrates the consequences of a substantial hiring stall on unemployment and proposes hiring subsidies – directly reduce firms’ costs and thereby stimulate hiring – as a cost-effective stimulus measure for European countries to reduce the risk of unemployment hysteresis effects.

Sascha O. Becker, Lukas Mergele, Ludger Woessmann, 05 April 2020

The year 2020 marks the 30th anniversary of the reunification of West and East Germany. German separation in 1949 into the Federal Republic of Germany and the German Democratic Republic and its reunification in 1990 offer a unique setting of a rather unexpected introduction and termination of a communist regime in one part of a previously and afterwards unified country. However, this column argues that this period of German history is not a completely straightforward ‘experiment’ from which to learn about the effects of communism.

Giulia Giupponi, Camille Landais, 01 April 2020

Short-time work is a subsidy for temporary reductions in the number of hours worked in firms affected by temporary shocks. Evidence suggests that it can have large positive effects on employment and can be more effective than unemployment insurance or universal transfers. This column discusses how the COVID-19 crisis – with its mandated reduction in hours of work and massive liquidity crunch for firms – is a textbook case for the use of short-time work. Taking into account available evidence and the current situation, it proposes guidelines to effectively implement short-term work.

Sebastian Heise, Tommaso Porzio, 29 February 2020

Thirty years after reunification, a stark and persistent wage gap between East Germany and West Germany remains. This column studies why East Germans do not migrate to the West to take advantage of the higher real wages there. Analysing data from more than 1 million establishments and almost 2 million individuals over 25 years, it suggests that moving people across space is difficult and costly. Reallocating workers to better jobs at their current location could be a more cost-effective avenue to increase aggregate wages, and even accelerate regional convergence.

Thushyanthan Baskaran, Zohal Hessami, 18 February 2020

The fact that women are underrepresented in politics is often viewed as an important social problem. But why should it be a problem? This column argues that when too few women hold political office, political decisions may not adequately reflect women’s needs and preferences. Using the example of the public provision of childcare in Germany, it shows that municipalities with a higher share of female councillors expand public childcare more quickly. The fact that the presence of women has substantive effects on policies should be taken into account in current debates around the introduction of gender quotas in politics.

Kym Anderson, 16 February 2020

Global alcoholic beverage markets have changed dramatically in recent years due to globalisation, income growth in emerging economies, changes in individual preferences, policy initiatives to curb socially harmful drinking, and, in particular, the dual trade policy shocks of Brexit and the US’s unilaterally imposed discriminatory tariffs. This column provides an overview of the major trends and projects the possible effects of Brexit and the US tariffs on the global alcohol market. It concludes that both shocks would reduce world trade in wine. Even countries not targeted by US tariffs can be worse off if those tariffs sufficiently reduce global consumption. 

Marvin Suesse, Nikolaus Wolf, 13 January 2020

There was a rapid spread of credit cooperatives in rural 19th-century Germany providing small-scale savings and loan services to previously unbanked people. This column shows how these cooperatives helped shift farm investment from grains to potentially profitable but more capital-intensive products, such as the production of meat and dairy. In cases like this, changes in the sector of economic activity are a better metric for the impact of microfinance than comparing income pre- and post-credit.

Dany Bahar, Andreas Hauptmann, Cem Özgüzel, Hillel Rapoport, 22 November 2019

The economic debate on immigration has focused on migration’s short-term labour market and fiscal effects. Less attention has been given to the long-run economic opportunities linked to migration. This column uses the case of refugees returning to the former Yugoslavia from Germany after the end of the Yugoslav wars to explore the role that returning migrants play in shaping the industrial development of their home country. The findings support the idea that migrants are drivers of knowhow and technology transfers between countries.

Tamas Vonyo, 21 November 2019

The year 1945 marked the end of the worst military conflict in history, which brought unprecedented destruction and loss of life. However, the quarter-century that followed is known as the most remarkable period of economic growth and social progress in Europe. This column, part of a Vox debate on WWII, lays out three factors that made this paradox possible: the strong foundations of economic recovery in Western Europe, vital support for the reconstruction of European trade and cooperation, and Allied support for the revival of the German economy. In contrast, Eastern Europe could barely recover due to the demographic disaster from the war.

Mark Harrison, 14 November 2019

Economic warfare was widely used in WWII. When one country blockaded another’s supply of essential goods or bombed the industries producing them, why did the adversary’s economy fail to collapse? This column, part of the Vox debate on the economics of WWII, reviews Mançur Olson’s insights, which arose from the elementary economic concept of substitution. He concluded that there are no essential goods; there are only essential uses, which can generally be supplied in many ways.

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