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The riskiness of individuals' saving behaviour affects their old-age wealth and has wider-ranging implications for macroeconomic development and stability. To which extent individuals take financial risks depends on their preferences, which may be moulded by the economic system they live in. I analyse households' financial risk taking after the collapse of the German Democratic Republic. Conditional on their income and financial wealth positions, East German households were more prone to financial risk taking than West German households after reunification. The differences in risk taking were quantitatively relevant shortly after reunification and gradually vanished until 2008. Risk taking of households who were exposed to the socialist system longer was higher. [ABSTRACT FROM AUTHOR]

During the financial crisis of 2007, the Economic Sentiment Indicator for Germany had already started the deepest drop in its history, reaching a new historical low in the second quarter of 2009. The drop was only temporary, as Germany became the de facto 'safe heaven' country and thus within 2 years the low became a sharp increase reaching a historical all-time high. The effect of 'safe heaven' country that Germany exhibited during the crisis and the resulting numbers for economic sentiment pose the question as to whether economic sentiment can be used to improve the positioning on the German financial market. We examine the link between sentiment and the performance of the German market, and how investors' herd behaviour should have used such a sentiment signal to take advantage of, during the depression and beyond. We perform a careful sample-split analysis of both the characteristics of sentiment and financial market performance in various sub-periods from the 1990s until today and also use economic sentiment as a guide for timing the German stock market. In our analysis, economic sentiment acquires a leading guide role for investors in the German market. [ABSTRACT FROM AUTHOR]

Despite measures on the European level to increase the compatibility between the higher education sectors, the recent literature exposes variations in their efficiencies. To gain insights into these differences, we split the efficiency term according to the two management levels each university is confronted with. We separate short-term and long-term efficiency while controlling for unobserved institution-specific heterogeneity. We argue that the first term reflects the efficiency of the individual universities working within the country, while the second term echoes the influence of the overall country-specific higher education structure. The cross-country comparison displays whether efficiency differences between countries are related to the individual performance of their universities or their higher education structure. This allows more purposeful policy recommendations and expands the literature regarding the efficiency of universities in a fundamental way. Choosing Italy and Germany as two important illustrative examples, we show that the Italian higher education sector exhibits a higher overall efficiency value. With the individual universities working at the upper bound of efficiency in both countries, the remaining inefficiency and the gap between the countries are caused by persistent, structural inefficiency. Future measures should hence aim at the country-specific structure and not solely at the activities of single universities. [ABSTRACT FROM AUTHOR]

The new German minimum wage applies a specific exemption clause for internships, where internships that last up to three months are exempted while internships that exceed three months are due to the minimum wage. Negative minimum wage effects on internships are heavily debated as internships are mostly non-productive. Difference-in-difference analyses that exploit establishment and regional variation in the bite of the minimum wage do not show a reduction in the number of internships. In addition, we pursue an innovative approach by using Google search data to analyse how the search intensity for internships changed in course of the minimum wage introduction. Difference-in-difference comparisons with other countries in Europe do not reveal an effect on the search for internship positions in general, but we observe a significant reduction in Google search for 'generation internship'. This suggests that the underlying societal phenomenon of a generation entering internships without a perspective for regular jobs has lost in relevance. [ABSTRACT FROM AUTHOR]

Inter-municipal cooperation (IMC) is often proposed as a politically feasible way by which rural municipalities can cope with intensified interregional competition and demographic change. We provide first evidence on citizens' support for IMC using survey data from rural Germany. We find little evidence that citizens are more willing to support IMC in munici-palities that can - by the logic of economic theory - expect higher net benefits from IMC. Citizens' support for IMC is primarily shaped by individual-level factors like the level of education, trust in local politicians and the degree of emotional attachment to the home mu-nicipality. Citizens' beliefs regarding the economic and political consequences of IMC are found to have the largest marginal effect by far. Regressions predicting interpersonal differ-ences in these beliefs show that these beliefs have to be considered independent drivers of policy preferences. This result suggests that more research is needed to better understand the factors shaping citizens' understanding of how economic policy works. This lack of under-standing applies to virtually all fields of economic policy. [ABSTRACT FROM AUTHOR]

This article contributes to the literature by using newly released comprehensive transaction-level data on all exports and imports to document facts about the amount ofintra-good trade– the simultaneous export and import of identical goods by one firm – in Germany. Combined data for trade transactions and for characteristics of a representative large sample of trading firms are then used to report differences between firms that export and import different goods only (inter-good traders) and firms that engage in the simultaneous export and import of identical goods (intra-good traders). We find that the share of intra-good trade in total trade was some 17% in Germany in 2012. Intra-good trade matters. This share differs widely between broadly defined groups of goods and between industries. Controlling for detailed industry affiliation, intra-good traders differ significantly from inter-good traders – they are larger, more human capital intensive, more productive, have a higher R&D intensity and are more profitable. The data, however, are not rich enough to reveal the direction of causality between intra-good trade and firm performance and to investigate empirically the reasons why some firms engage in intra-good trade. [ABSTRACT FROM PUBLISHER]

Using a representative survey of the German population, this article studies self-reported individual consumption responses to a recent exogenous payroll tax reduction. About 55% of the respondents report that they spend the extra money, indicating considerable potential for tax changes to affect consumption and economic activity. Our analysis of the socio-demographic and economic covariates of consumption responses suggests, among other effects, that interest rates are related to consumption responses to tax changes, and that households with higher income have a higher propensity to consume. [ABSTRACT FROM AUTHOR]

This article investigates the degree of monopsony power of employers in different industries against the background of a statutory minimum wage introduction in Germany in January 2015. A semi-structural estimation approach is employed based on a dynamic model of monopsonistic competition. The empirical analysis relies on a linked employer–employee data set which allows to control for observed heterogeneity both on the worker and on the firm side. The results show important differences in monopsonistic competition among low-wage industries: While retailing, the hotel and restaurant industry as well as agriculture can be described as monopsonistic labour markets, this is not true for other services and manufacturing of food products. From a policy point of view, the introduction of a uniform minimum wage may therefore lead to different employment reactions in industries with a similar minimum wage bite. [ABSTRACT FROM AUTHOR]

This article tests the additional information content of price-earnings ratios, with respect to Tobin’sq, in explaining firms’ investment behaviour. While Tobin’sqdescribes the expected future earnings related to those projected by thebook value, the price-earnings ratio compares future growth of earnings based on the projection ofcurrent earnings. In other words, a high price-earnings ratio might indicate that investors are willing to rely on future earnings growth, even though current earnings are low. By using an unbalanced panel of about 500 listed firms from Germany over the period 1987–2007, we find that including the price-earnings ratio in the investment equation does not change the explanatory power of Tobin’sq. Most notably, the price-earnings ratio exerts a positive and significant impact on investment. These results are robust to the inclusion of a measure of the firm’s internal funds and of fixed effects and also to the use of different estimators. [ABSTRACT FROM PUBLISHER]

With this article we present the first microeconometric analysis of the impact of a foreign acquisition on the target firm’s access to finance. By using a large database of German firms, we furthermore investigate for the first time the link between foreign ownership and access to finance in Germany, one of the world's leading target countries for FDI. We use newly available comprehensive panel data that we constructed from information collected by the German statistical offices and from credit rating scores supplied by the leading German credit rating agency. We find foreign-owned firms in German manufacturing on average to show slightly more financing restrictions than domestically owned enterprises, but this very small difference diminishes once unobserved heterogeneity is taken into account. We further demonstrate that one reason for this finding is the preference of foreign investors for targets with relatively low credit-worthiness. Although the likelihood of a foreign acquisition appears to be correlated with credit rating, there is no impact of foreign takeovers on the credit constraints of the target firmsex postand therefore no support for the hypothesis that foreign takeovers ease financial frictions. [ABSTRACT FROM PUBLISHER]

This study provides the first evidence of foreign takeover effects on the performance of acquired firms in Germany that considers a general takeover effect through the comparison with domestic takeovers. A propensity score matching approach combined with a difference-in-differences (DiD) estimator were performed with new high-quality panel data for manufacturing enterprises, provided by German official statistics. The results indicate a negative impact of foreign takeovers on employment and no productivity improvements for the period 2007–2009. This evidence contradicts existing empirical evidence for Germany which suggests significant productivity improvements and no changes in terms of employment. These findings are of particular interest to Germany as one of the most important FDI inflow destinations worldwide. They contribute to the foreign ownership performance premium literature as well as improving the understanding of foreign acquisition consequences, a subject of utmost topicality. [ABSTRACT FROM PUBLISHER]

This study uses tailor-made enterprise-level data for 2008–2010 from various sources for firms from manufacturing industries to test for the link between credit constraints, measured by a credit rating score provided by a leading credit rating agency, and imports in Germany for the first time. We find empirical evidence that a better credit rating score is positively related to extensive margins of import – firms with a better score have a higher probability to import, they import more goods and they source from more countries of origin. The intensive margin of imports – the share of imports in total sales – is found not to be related to credit constraints. [ABSTRACT FROM AUTHOR]

This study analyses the exchange rate pass-through into German import prices based on disaggregated data taken on a monthly basis between 1995 and 2012. Our main contribution is twofold: firstly, we employ various time-series techniques to analyse data for different product categories, and also cointegration techniques to carefully distinguish between short-run and long-run pass-through coefficients. Secondly, in a panel data approach we estimate time-varying pass-through coefficients and explain their development with regard to various macroeconomic factors. Our results show that long-run pass-through is only partly observable and incomplete, whereas short-run pass-through shows a more unique character, although heterogeneity across product groups does exist. We are also able to identify several macroeconomic factors that determine changes in the degree of pass-through, which is especially relevant for policymakers. [ABSTRACT FROM PUBLISHER]

This article uses a tailor-made newly available data set for enterprises from manufacturing industries in Germany to investigate for the first time the links between export diversification over destination countries and goods on the one hand and the profitability of the exporting firms on the other hand. We find that profits tend to be larger in firms with less diversified export sales over goods and in firms with more diversified export sales over destination countries. [ABSTRACT FROM AUTHOR]

How does labour market policy affect welfare recipients and long-term unemployed people? We investigate whether job search assistance (JSA) helps disadvantaged individuals to find jobs and whether courses or individual counselling is more successful in reaching this goal. To evaluate individual employment effects, we apply a quasi-experimental design and construct suitable comparison groups using propensity score matching methods. We compare participants to nonparticipants as well as participants of both schemes directly. Our article benefits from access to rich administrative data from the German Federal Employment Agency. When comparing participants to nonparticipants, results suggest that the individual JSA does not affect participants’ employment prospects at all and that the course JSA even decreased their employment chances. At the same time, differences in these effects can be ascribed to programme design differences and to differences in the groups of participants. Therefore, we compare both programmes directly to each other, that is, we use the other programme participants as a comparison group, respectively. We found some evidence that individual JSA performs better than course JSA. [ABSTRACT FROM PUBLISHER]

Exploiting the information contained in an economy’s input-output matrix and using the novel approach developed by Fisher and Marshall (2011), we calculate Rybczynski effects and Stolper–Samuelson effects for Germany in 2007. We show how sectoral output and factor remuneration react to exogenous changes of factor endowments and product prices, respectively. These calculations are implemented using two different models comprising one with labour and capital as the classical production factors and one where we introduce patent stock as an additional factor of production. In the former, we further differentiate between a scenario where all production factors are mobile and one with sector-specific capital. In the latter analysis, we measure the impact of innovation-targeting policy action for sectoral output. Positive Rybczynski effects of patents and high-skilled workers are strongest in knowledge-intensive sectors, while other sectors contract. The introduction of patents as a further production factor has only minor influence on the Rybczynski effects of other factors. [ABSTRACT FROM PUBLISHER]

This  study uses newly available enterprise-level data for firms from manufacturing industries in Germany to test for the link between credit constraints, measured by a credit-rating score from the leading credit-rating agency Creditreform, and exports. In line with hypotheses from a theoretical model, we find a positive link between a better credit-rating score of a firm and both the probability that the firm is an exporter and a higher share of exports in total sales. This link, though statistically highly significant, is not very strong from an economic point of view. While empirical evidence for the hypothesis that credit-constrained firms are less likely to start to export is, at best, weak, we find no evidence for a statistically significant difference in credit-rating scores between firms that stopped to export and firms that continued to export. [ABSTRACT FROM PUBLISHER]