If we are to solve the challenges facing our society, such as public debt crisis and demographic change, first of all we need a sound theoretical and empirical analysis of public budgets and social insurance systems. Responding to this need, the researchers of the unit ‘Public Finance, Social Security Systems, Income and Wealth Distribution’ examine the fiscal consequences of specific government policies, analyse the incentive and distribution effects for companies and private households and evaluate governmental redistribution policies.
Our aim is to develop ideas for effective long-term financial policies and reliable and efficient social insurance coverage for the major risks in life, i.e. old age, illness and long- term care. In the European context this requires a profound analysis of the Member States’ regulatory framework in order to understand interdependencies between varying national subsystems.
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Sections of the Research Unit
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Besides the public debt crisis, the issue of profit shifting is a case of major importance for international tax policy. Tax competition makes it possible for multinational enterprises subject to taxation in different countries to minimise their tax burden. While national governments tend to see this as a risk to their tax revenues, multinational companies must be considered a boon to the German treasury. Despite the opportunities for transferring profits abroad, they decently contribute to the country’s fiscal system. The EU Commission’s current initiative on harmonising taxation of multinational enterprises in Europe comes on time. However, reflecting these findings there is only a low incidence of tax avoidance in Germany.
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Using European microdata we analyse the redistributive effects of levies and monetary social transfers in Germany and other EU Member States. The results indicate that the incidence of income redistribution in Germany is significantly above average. Whereas Western Europe, Scandinavia and certain Eastern European countries have a high degree of redistribution, in the Baltic States and the countries of Southern Europe the level is significantly lower. Forthcoming research will focus on two questions: first, the effects of low interest rates on income inequality, and second, on whether there is indeed a negative correlation between income inequality and economic growth, as predicted by two prominent studies of the OECD and the IMF.
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The ageing of the European population will have a considerable impact on the sustainability of the Member States’ pay-as-you-go financed social security schemes. The demographic challenge will continue to exist, even after the crisis will have been solved. Therefore, it is important to focus on long-term scenarios when reforming social security systems like old age provision or health care. In our current study about the demographic challenge for the Member States’ public pension schemes we put an emphasis on the nation-specific elements of old age provision. As they differ in various aspects, we argue that pension policy should remain a national issue. However, the Commission’s reporting can encourage transparency and might help to induce necessary debates within the Member States.
Should the State Pension Scheme Take Different Socio-demographic Backgrounds into Account?
Florian Blank / Johannes Geyer, Peter Haan, Maximilian Schaller / Jochen Pimpertz / Reinhold Thiede / Martin Werding
While German law stipulates a standard retirement age for all members of the public pension scheme, empirical studies have shown that life expectancy is unevenly distributed within the population, varying according to income level, professional status, occupational health risks, and gender.
Florian Blank / Johannes Geyer, Peter Haan, Maximilian Schaller / Jochen Pimpertz / Reinhold Thiede / Martin Werding IW
Pharmaceuticals in Transition: The Need for Skilled Labour in an Era of Digital Transformation
Jasmina Kirchhoff / Lydia Malin / Simon Schumacher
The shortage of skilled workers is increasingly confronting companies in Germany with major challenges. In view of the demographic and transformational tasks, there is a considerable danger that this situation will exacerbate.
Jasmina Kirchhoff / Lydia Malin / Simon Schumacher IW
Martin Beznoska / Christian von Haldenwang / Ruth Maria Schüler
The Global Tax Expenditures Database (https://gted.net/) collects national reports on tax expenditures for 101 countries for the period from 1990 to the present.
Martin Beznoska / Christian von Haldenwang / Ruth Maria Schüler IW
A Focus on the Middle Class - Demarcation, Development and Mobility
Judith Niehues / Maximilian Stockhausen
In 2018, roughly every second German was a member of the middle class as measured by income, a proportion which has barely changed for more than a decade. However, the lower income threshold of this middle-income group has risen - an indication of increased prosperity.
Pension Concerns in Germany: Determinants and Normative Implications
Ruth Maria Schüler
The level of statutory pensions for future generations is set to decline systematically. If future retirees are to maintain their standard of living, they will therefore need to supplement their statutory benefits with private and occupational pensions – a change already initiated with the pension reforms of the early 2000s.
Where the German Pharmaceutical Industry Sources its Intermediate Inputs: An International Comparison
Jasmina Kirchhoff
The Corona pandemic has led to increasing demands for the reshoring of pharmaceutical production back to Germany. A strategic dependence on non-European active ingredient and drug manufacturers is cited as an argument.
IW-Forschungsgruppe Gesamtwirtschaftliche Analysen und Konjunktur
In the course of 2021 Germany’s economic recovery has once again perceptibly lost momentum. After the strain brought about at the beginning of the year by the lockdown for the second and third waves of the Covid19 pandemic, manufacturing and construction companies are now struggling with a shortage of materials, while higher prices for fossil fuels are imposing an additional burden.
IW-Forschungsgruppe Gesamtwirtschaftliche Analysen und Konjunktur IW
More medicines "made in Germany" via international networking
Jasmina Kirchhoff
The Corona pandemic has put the German pharmaceutical industry more than ever in the focus of political and social discussions. At an unprecedented speed, pharmaceutical companies have developed and brought to market four vaccines approved in Europe – German companies have played a major role in this success.
Income tax policy in the federal election campaign
Martin Beznoska / Tobias Hentze
Income tax policy plays a relevant role in the election programs for the German federal election 2021. According to the election programs, basically all parties are aiming for relief for small and medium incomes and for households with children.
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