From:                                         Heres, Kerstin <>

Sent:                                           Freitag, 24. Juli 2020 09:28

To:                                               IHS Library

Subject:                                     ZEW Discussion Papers


Sehr geehrte Damen und Herren,

im Rahmen unseres E-Mail Services finden Sie Titel und Zusammenfassung der neuen Discussion Papers aus den Forschungsbereichen des ZEW, um deren Zusendung Sie gebeten hatten.


as requested we send you via our e-mail service the Discussion Papers from those Research Departments of the Centre for European Economic Research which you have selected.


Mit freundlichen Grüßen / Sincerely yours

Kerstin Heres




Corporate Taxation and Public Finance



NO. 2 0 - 0 2 7 | 0 6 / 2 0 2 0


The Incidence of VAT Evasion





Who benefits from the evasion of value added taxes (VAT)? Using a reform that enforced

VAT on previously non-compliant large retailers in Armenia, we estimate a one-third

passthrough of the tax burden on prices. This suggests that pre-enforcement evasion rents were broadly shared with consumers through lower prices. Our theoretical and empirical results explain this low passthrough rate by the supply-chain effects and second-order compliance responses of firms to VAT enforcement. Our distributional analysis shows that households at the bottom of the income distribution benefit more from the rents of evasion.


JEL codes: D11, H22, H26

Keywords: Value added tax, Incidence, Evasion, Enforcement, Distributional Effects. 


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NO. 2 0 - 0 2 8 | 0 6 / 2 0 2 0

Austerity and Distributional Policy





What are the effects of austerity on distributional policy? We exploit the autonomy of Italian municipalities in setting non-linear income taxes and the exogenous introduction of a fiscal rule to show that austerity increases income tax progressivity. Consistent with this evidence, we find that in a panel of countries austerity correlates with higher marginal tax rates on top- but not on average-earners. The increase in progressivity in Italy is driven by high-skilled mayors, while low-skilled mayors raise taxes uniformly. In the election after the reform, high-skill mayors have higher reelection odds than low-skill mayors, while there was no difference beforehand.


JEL Classification: D78, H24, H70.

Keywords: austerity, fiscal rules, non-linear income taxation, difference-in-discontinuity


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NO. 2 0 - 0 3 0 | 0 7 / 2 0 2 0

A Global Decline in Research Productivity?

Evidence from China and Germany




In a recent paper, Bloom et al. (2020) find evidence for a substantial decline in research productivity in the U.S. economy during the last 40 years. In this paper, we replicate their findings for China and Germany, using detailed firm-level data spanning three decades. Our results indicate that diminishing returns in idea production are a global phenomenon, not just confined to the U.S.


Keywords: Productivity; Growth; Innovation; R&D; Technological Change

JEL codes: D24, E23, O31, O47


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Economics of Innovation and Industrial Dynamics


NO. 2 0 - 0 2 9 | 0 6 / 2 0 2 0


Hiring New Key Inventors to Improve Firms’ Post-M&A Inventive Output




Although merger and acquisitions (M&As) are acknowledged as an important means to access innovative assets and know-how, firms’ inventive output often declines in the post-M&A period. Financial, managerial and organizational constraints related to the M&A event contribute to inventive output declines and inventors’ departure. Prior literature treats the acquiring firm as a passive observer of invention declines. This study argues that acquiring firms can take measures by hiring new key inventors. We show that the hiring of new key inventors in the post-M&A period can counteract invention declines in two ways. First, these newly hired inventors are associated with an increase of corporate inventive output after the M&A. Second, they are also associated with an improved inventive output of inventors already working for the acquiring firm.

These results suggest that an appropriate hiring policy can counteract declining inventive output of firms in the aftermath of M&As.


Keywords: M&A, post-M&A inventive output, key inventors, KBV

JEL: O34, O32, G34


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Environmental and Resource Economics, Environmental Management


NO. 2 0 - 0 3 1 | 0 7 / 2 0 2 0


Trade Liberalization and SO2 Emissions:

Firm-level Evidence from China’s WTO Entry




Is trade liberalization contributing to cleaner production amongst manufacturing firms? Theoretical predictions and empirical evidences are mixed. This study utilizes China’s dual trade regime and China’s WTO entry in 2001 to construct a unique micro dataset on manufacturing firms for China for the period 2000-2007, and performs a difference-in-difference estimation strategy to directly examine this issue. Specifically, normal exporters that saw tariff changes during the same period form the treatment group; while processing exporters that enjoy tariff-exemptions both pre- and post-WTO entry serve as the control group. Results show that China’s WTO entry contributed to a lower SO2 emission intensity for normal exporting firms. We further examine the mechanism and show that the productivity channel accounted for the observed pattern. Specifically, more efficient normal exporters saw greater decline of SO2 emission intensity than average normal exporters. This study contributes to a better understanding of the impact of trade on the environment, especially in developing countries. It also complements the literature in terms of providing China’s micro evidence on the impact of trade liberalization on firm’s environmental performance.


Keywords: WTO; trade liberalization; dual trade regime; SO2 emission intensity; China

JEL codes: F18; Q53; Q56


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Market Design


NO. 2 0 - 0 3 2 | 0 7 / 2 0 2 0


What Happens when Separate and Unequal School Districts Merge?




We study the welfare effects of school district consolidation, i.e. the integration of disjoint school districts into a centralised clearinghouse. We show theoretically that, in the worst-case scenario, district consolidation may unambiguously reduce students' welfare, even if the student-optimal stable matching is consistently chosen. However, on average all students experience expected welfare gains from district consolidation, particularly those who belong to smaller and over-demanded districts. Using data from the Hungarian secondary school assignment mechanism, we compute the actual welfare gains from district consolidation in Budapest and compare these to our theoretical predictions. We empirically document substantial welfare gains from district consolidation for students, equivalent to attending a school five kilometres closer to the students' home addresses. As an important building block of our empirical strategy, we describe a method to consistently estimate students' preferences over schools and vice versa that does not fully assume that students report their preferences truthfully in the student-proposing deferred acceptance algorithm.


Keywords: school district consolidation, integration of matching markets, preference estimation without truth-telling.

JEL Codes: C78, I21.


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Social Policy and Redistribution


NO. 2 0 - 0 3 3 | 0 7 / 2 0 2 0


Unemployment Benefit Duration and Startup Success




Despite the importance of business creation for the economy and a relevant share of new firms being started out of unemployment, most research has focused on analyzing the effect of unemployment insurance (UI) policies on re-employment outcomes that ignore self-employment. In this paper, we assess how UI benefit duration affects the motivation for creating a startup while unemployed and the subsequent firms’ success. To do so, we create a comprehensive dataset on founders in Germany that links administrative social insurance with survey data. Exploiting reform- and age-based exogenous variations in potential benefit duration (PBD) within the German UI system, we find that longer PBD leads to longer actual unemployment duration for those becoming self-employed. Furthermore, the UI duration elasticity for these individuals is higher than common estimates for those individuals becoming re-employed. With increasing unemployment benefit duration, the founders’ outcomes in terms of self-assessed motivation, sales, and employment growth lessen. This overall causal effect of PBD can be rationalized with a mix of composition and individual-level duration effects. Therefore, our findings suggest that it is important to consider the fiscal externality of UI on startup success when it comes to the (optimal) design of UI systems.


JEL-Classifications: D22, J21, J23, J44, J62, J64, J65, L11, L25, L26, M13

Keywords: entrepreneurship, unemployment insurance, fiscal externality


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Labour Markets and Human Resources


NO. 2 0 - 0 3 4 | 0 7 / 2 0 2 0


The Effectiveness of School Closures and Other Pre-Lockdown COVID-19 Mitigation

Strategies in Argentina, Italy, and South Korea




The rapid spread of COVID-19 forced policy-makers to swiftly find solutions to reduce infection rates and keep mortality as low as possible. Empirical analyses on the effectiveness of control measures are hereby of primary importance. School closures were among the earliest measures enacted by the governments of most countries. However, while schools are now reopening in many countries, the impact of school closures on the course of the epidemic is still an open question. Adopting parametric and non-parametric synthetic control methods we estimate the effectiveness of pro-active school closures, and other early social distancing interventions, in three countries that reacted relatively early during the course of the pandemic. Our findings suggest that these interventions were effective at reducing the mortality rate of COVID-19, especially when enacted early.


Keywords: COVID-19, policy evaluation, school closures, mitigation strategies.

JEL: I18, J18


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Digital Economy


NO. 2 0 - 0 3 5 | 0 7 / 2 0 2 0


Economic Policy for Digital Attention Intermediaries




This report provides an overview on the economics of attention intermediaries. It addresses the following questions: What are the economics of attention intermediaries? For competition policy, how should markets be defined and market power of attention intermediaries be assessed? What theories of harm in merger control and abused of dominance possibly apply to attention intermediaries? The report also touches on consumer protection policies and other regulatory issues.


Keywords: Attention intermediaries, platforms, market power, regulation, digital markets.


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ZEW – Leibniz-Zentrum für Europäische Wirtschaftsforschung GmbH Mannheim 

L7, 1 · 68161 Mannheim | Sitz der Gesellschaft: Mannheim · Amtsgericht Mannheim HRB 6554 | Aufsichtsratsvorsitzender: Ministerialdirektor Ulrich Steinbach | Geschäftsführer: Prof. Achim Wambach, Ph.D.; Thomas Kohl


ZEW – Leibniz Centre for European Economic Research

L7, 1 · 68161 Mannheim, Germany | Registered Office: Mannheim · Local Court Mannheim HRB 6554 | Chairman of the Supervisory Board: Ministerial Director Ulrich Steinbach | Executive Directors: Prof. Achim Wambach, PhD; Thomas Kohl