The Eurozone crisis: What really motivates Germany

IZA Director Klaus F. Zimmermann

Klaus F. Zimmermann

In the global debate about the Eurozone crisis, Germany has come in for a lot of criticism. The German position has been described as engaging in a “morality tale” (aimed at forcing other countries to pay back their debts). Alternatively, it is regarded a display of “nationalism” (by just pursuing narrow Germany’s interests) – if not as practicing “hegemony” (by seeking to impose a German model onto the rest of Europe).

I am struck by how much these descriptions – juicy as they are in purely journalistic terms – miss what really drives the German government. To see what the real driving force is, just ask yourself this question: Why do Germans talk so much about the need for structural reforms in Europe?

German policymakers are painfully aware that, among the advanced economies, there is one major country where structural reforms – such a touchy matter in Europe – really are no political issue. That country is the United States.

Role model for Europe?

The U.S. has the immeasurable advantage that embracing change on an ongoing basis is simply built into its national DNA. Nobody there is asking for permission to engage in it. Change is simply happening all the time.

Much of the same is true in many of the dynamic emerging markets, especially in Asia.  Like it or not, those are realities Europe has to contend with. Continue reading

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Inequality — a hot topic in public debates and IZA research

IZA Workshop on InequalityInequality has been rising in many countries over the last decades, making it a hot topic in current academic and public debates. While the increasingly unequal distribution of wealth and income can lead to political unrest, too narrow distributions may impede economic growth by stifling incentives to work hard or take risks.

On March 20-21, international researchers met in Bonn for the IZA Workshop on Inequality to present and discuss cutting-edge research on causes and consequences of inequality in income, wealth, education and health. Among the participants were renowned scholars including Anders Björklund, Andrea Brandolini, Daniele Checchi, Peter Gottschalk, Thomas Lemieux and Bhashkar Mazumder.

In his keynote lecture, Stephen Machin described the real wage decline of workers at the bottom of the income distribution that happened in the US and UK since the 1980s (and with some delay also in Germany), which he closely related to the demise of unions, with especially new workers and firms being hesitant to unionize.

A selection of the presented papers will be considered for a forthcoming special issue of Research in Labor Economics, whose editors Solomon Polachek and Konstantinos Tatsiramos organized the workshop together with Lorenzo Cappellari.

Related articles in IZA World of Labor:

Some recent IZA Discussion Papers on the topic:

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IZA Fellow Sarah Brown appointed to the UK’s independent Low Pay Commission

sbrownSarah Brown, economics professor at the University of Sheffield and IZA Research Fellow since 2008, has been appointed a new member of the Low Pay Commission (LPC) that advises the British government. “The Low Pay Commission’s independent, expert advice is critical to ensuring the ongoing success of the National Minimum Wage, balancing the need to protect the earnings and jobs of the lowest-paid workers with affordability for employers,” said Business Minister Jo Swinson.

National governments frequently seek the expertise of IZA network members on minimum wage issues:  IZA Policy Fellow Tim Butcher is Chief Economist at the LPC, whose current and former members include IZA Research Fellows Richard Dickens and  Stephen Machin. Similarly, the Group of Experts on the minimum wage in France (SMIC), headed by IZA fellow Francois Bourguignon, includes IZA Program Directors Pierre Cahuc and Stefano Scarpetta, as well as Eve Caroli (and in the past Francis Kramarz).

The online platform IZA World of Labor provides state-of-the-art evidence-based research on the topic, including the following articles:

International experts and policymakers discussed these findings, for instance, at an IZA conference in Berlin and an IZA World of Labor seminar at the OECD in Paris.

Read also why minimum wage increases are a poor way to help the working poor (IZA Policy Paper by R. Burkhauser).

See related IZA Newsroom posts on the minimum wage.

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On the origins of dishonesty: Do kids learn to cheat from their parents?

dishonestyDishonesty is a pervasive and costly phenomenon that may threaten mutual trust and social cohesion. But why is it that men tend to lie or cheat more often than women? IZA fellow John List and his co-authors Daniel Houser, Marco Piovesan, Anya Samek and Joachim Winter explore a possible explanation in a lab experiment (IZA DP No. 8906), which shows that parents are more likely to cheat in front of sons than in front of daughters.

(Note: This column was originally published on; edited and reposted with permission.)

Dishonesty is a widespread and multifaceted phenomenon – every day, the news brings reports of corporate dishonesty generating millions of dollars of costs to society. These public scandals, however, account only for a small part of dishonesty in society. Many ordinary people who consider themselves honest nevertheless sometimes cheat on taxes, steal from the workplace, illegally download music from the Internet, or use public transportation without paying the fare. The social cost of small-scale dishonesty is surprisingly large. As Dan Ariely summarizes in a recent article, the ‘tax gap’ – the difference between what the IRS estimates taxpayers should pay and what they actually pay – exceeds $300 billion annually; and employee theft and fraud is estimated at $600 billion a year in the US (Mazar et al. 2008).

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IZA Evaluation Dataset Survey now online!

IDSC_LOGO_PANTONEThe IZA Evaluation Dataset Survey (IZA ED Survey) is a novel panel survey which tracks the employment history, behavior and individual traits of a large, representative cohort of individuals. It covers a panel of 18,000 individuals who registered as unemployed at the Federal Employment Agency in Germany between June 2007 and May 2008.

The individuals were interviewed up to four times over a time span of three years, starting at their entry into unemployment. This data allows researchers to observe dynamics with respect to individual and labor market characteristics during the early stage of unemployment, as well as tracking long-run outcomes.

Within the survey, information on labor market activities, ALMP (Active Labor Market Policy) participation, migration background, search behavior, ethnic and social networks, psychological factors, cognitive and non-cognitive abilities, attitudes and preferences was recorded. Its large sample size of individuals entering unemployment, in combination with its broad set of variables and the measurement of unemployment dynamics offers many new perspectives for empirical labor market research (read more in IZA Compact, May 2014).

We are proud to announce that the IZA ED Survey is now available online to interested researchers, via the IDSC of IZA, upon registration at

“The publication of the dataset in this form has been the result of a significant amount of combined legal, tech and scientific work”, said IZA Director of Data and Technology Nikos Askitas, “for which I would like to thank the Head of our Data Committee, Steffen Künn.”

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Don’t worry, be happy! A selection of empirical evidence for the International Day of Happiness

International Day of HappinessToday is the International Day of Happiness! The perfect opportunity to provide an overview of some cutting-edge research on what makes us (un)happy. Read these exciting articles from IZA World of Labor, the IZA Open Access Journals and the IZA Newsroom:

Survey articles from the IZA World of Labor on the economics of happiness:

Recent articles published in the IZA Journals:

Previous posts in the IZA Newsroom:

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‘High’ achievers? Students banned from cannabis shops perform better at university

cannabisShould the recreational use of cannabis be legalized? In recent years, there has been a momentum towards more liberal drug policies across the world. In Europe many countries have decriminalized consumption. In Germany, Berlin is considering opening up the first legal cannabis shop of the country. Uruguay plans to be the first nation in the world to fully legalize all aspects of the cannabis trade. In the U.S. over 20 states now allow medical marijuana use, and recreational consumption has become legal in Alaska, Oregon, Washington and Colorado. With scarce empirical evidence on its societal impact, these policies are often implemented without much knowledge about their potential effects.

A recent IZA discussion paper by Olivier Marie and Ulf Zölitz provides new empirical evidence to the legalization debate by looking at the side effects of a very unusual policy experiment that took place in Maastricht, the Netherlands. In 2011, a temporary city-wide regulation was introduced which restricted legal cannabis access via licensed ‘coffeeshops’ depending on individual’s nationality. Only Dutch, German and Belgian passport holders maintained access while other nationals were prohibited from buying cannabis legally.

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