Fiscal restraint and the political economy of Europe: In the past, member states instrumented the popularity of the European idea to enforce national fiscal discipline and implement important reform policies. Looking back at what happened over a quarter of a century:

The paper “Fiscal Restraint and the Political Economy of EMU” by Ralph Rotte and Klaus F. Zimmermann, published in Public Choice in 1998, discussed the impact of the Maastricht Treaty on fiscal policies.

The authors argued that the Maastricht Treaty provided a unique international commitment that enabled governments to follow restrictive fiscal policies by attributing their negative effects to Europe. This allowed them to implement austerity measures despite rising unemployment or declining growth.

The authors suggested that the popularity of the European idea was used to enforce fiscal discipline. While the principle of delegation had become well established on the national level for monetary policy, fiscal policies remained in the hands of policymakers depending on rent-seeking interest groups.

The study outlined the political-economy framework and presented new econometric evidence. The findings provided insights into the dynamics of fiscal restraint within the context of the European Monetary Union.

Abstract: “While the principle of delegation has become well established on the national level for monetary policy, fiscal policies remain in the hands of policy makers depending on rentseeking interest groups. We argue that the Maastricht Treaty provides a unique international commitment that enables governments to follow restrictive fiscal policies by attributing their negative side-effects to Europe, and to implement austerity measures despite rising unemployment or a decline in growth. Hence, the popularity of the European idea is instrumented to enforce fiscal discipline. The paper outlines the political economy framework and presents new econometric evidence.”

From the conclusions: “Our empirical evidence shows that there is a distinguished effect of the Maastricht commitment on fiscal policies in Europe, and strengthens the conjecture that it is the support for the EU and the character of EMU as a genuinely European project which has made a fundamental change in economic policy all over Western Europe possible. The unique combination of the international character of the Maastricht commitment and the Europeans’ persistent support of the EU project thus provide the framework for fiscal reform in Europe.”

Rotte, R., Zimmermann, K.F. Fiscal restraint and the political economy of EMU. Public Choice 94, 385–406 (1998).
https://doi.org/10.1023/A:1005042015560

Featured image: arnaud-jaegers-unsplash

Zimmermann ist emeritierter Wirtschaftsprofessor der Universität Bonn, war knapp 20 Jahre Gründungsdirektor des Bonner Instituts zur Zukunft der Arbeit (IZA) und leitete gleichzeitig über 11 Jahre als Präsident des Deutschen Instituts für Wirtschaftsforschung (DIW) einen radikalen Reformprozeß des führenden Wirtschaftsinstituts in Berlin. Er war ferner langjähriger Vorsitzender der Arbeitsgemeinschaft der deutschen Wirtschaftsforschungsinstitute (ARGE).

Heute führt Zimmermann als Präsident der Global Labor Organization (GLO) ein weltweites Forschungsnetz von Fachwissenschaftlern und einschlägigen wissenschaflichen Institutionen in über 120 Ländern. Gleichzeitig ist er der Forschungseinrichtung UNU-MERIT in Maastricht, einem gemeinsamen Forschungszentrum der United Nations University und der Maastricht University als Forschungsdirektor und Honorarprofessor verbunden. Wissenschaftler der GLO entwickeln Forschungsimpulse für den afrikanischen Arbeitsmarkt.

Anfang Dezember 2018 war Zimmermann einer der Referenten der African Economic Conference 2018, die in Kigali/Ruanda gemeinsam von der
African Development Bank (AfDB), der United Nations Economic Commission for Africa (ECA) und dem United Nations Development Programme (UNDP) organisiert wurde. (Zu den Details der Veranstaltung, die sich mit der wirtschaftlichen Integration Afrikas zu einem Wirtschaftsraum beschäftigte, s. die Reports und die Hinweise dort: REPORT 3, REPORT 2 & REPORT 1.)

afrika wirtschaft: Was ist das beste Rezept, um Jobs zu schaffen?

Klaus F. Zimmermann: Es wird nötig sein, sich an den relativen Stärken des Kontinents und seinem großen Bedarf zu orientieren: Eine dominante Landwirtschaft, ein ungeheurer Reichtum an natürlichen Resourcen und viele junge Arbeitskräfte.  Die sich aufbauende Infrastruktur mit den dort benötigten Jobs wird das Rückgrat der Entwicklung bilden müssen. In der für Entwicklungsländer üblichen Selbständigkeit, womit nicht großes “Unternehmertum” gemeint ist, wird ferner ein strategischer Schwerpunkt liegen.

afrika wirtschaft: Welche Branchen sind besonders vielversprechend?

Klaus F. Zimmermann: Die kulturelle Kreativität des Kontinents könnte auf den Unterhaltungssektor und den Tourismus als langfristige exotische Optionen für wichtige Leistungsträger hindeuten, es sind aber eher unsichere Prognosen. Die meisten Jobs werden weiter in der Agrarwirtschaft besetzt werden, schon wegen des großen Ernährungsproblems und der Exportchancen. Im Umfeld der Entwicklung der Infrastruktur liegen ferner Chancen im Bankensektor, der Informations- und Kommunikationswirtschaft und bei Transport und Logistik. Schließlich sehe ich Möglichkeiten im Umfeld von Bergbau und Energiegewinnung, bsw. bei der Solar- und Windenergie in Nordafrika.

afrika wirtschaft: 20 Millionen Jobs pro Jahr – wie kann das bewältigt werden und was kann die deutsche Wirtschaft dazu beitragen?

Klaus F. Zimmermann: Mediendemokratien wie Deutschland fehlt dazu die nötige strategische Fantasie. Die chinesischen Inititativen um die neue Seidenstraße bzw. Chinas Bemühungen in Afrika um Resourcen und Infrastruktur könnten Denkanstöße liefern. Eine Ausbildungsinitiative des deutschen Handwerks und der deutschen Wirtschaft generell sowohl in den Sendeländern wie auch durch temporäre Arbeits- und Ausbildungsmigration in Deutschland (bsw. im Geiste der Africa German Youth Initiative), könnte die deutschen Vorteile mobilisieren und Afrika und Europa näher zusammenführen.

afrika wirtschaft: Bisher sind Deutschland und die EU in ihrer Beziehung zu Afrika klassische Geberländer. Mit zahlreichen Initiativen will die Bundesregierung den Nachbarkontinent zum gleichgestellten Partner machen. Ist das realistisch? (DIESE LETZTE FRAGE UND ANTWORT ENTFIEL AUS PLATZGRÜNDEN IN DER DRUCKFASSUNG.)

Klaus F. Zimmermann:  Solange es letztlich dann doch nur um Sicherheitspartnerschaften und die Absicherung der Grenzen zur Festung Europa geht, kann dies nicht klappen. Der Aufbau eines gemeinsamen Wirtschaftsraumes Mittelmeer einschließlich einer Region neue Energien in Nordafrika wie einer EU-Partnerschaft mit einer Wirtschaftsunion Afrika wären Ansatzpunkte. Dafür fehlen Deutschland aber in der EU die visionären Partner, sodaß es wohl bei der Absicht bleiben wird.

Ends;

The meeting ended a four weeks trip of GLO President Klaus F. Zimmermann to Beijing and Hong Kong to discuss climate change. The trip was exceptionally successful, and the perfect ending in Hong Kong was celebrated at the airport with champagne and beer…. Zimmermann returned home after lunch to Bonn/Germany.

The Breakfast Discussion  was chaired by Andreas Oberheitmann (FOM, RWI and GLO) and welcomed by Wolfgang Ehmann, Head of the German Chamber of Commerce, Hong Kong. The keynote speeches were provided by Manfred Fischedick, Wuppertal Institute for Climate, Energy and Environment, and Eric CHUNG, President and CEO of Siemens Ltd. Hong Kong and Member of the Board of Directors of the Business Environment Council (BEC), Hong Kong. Peter Hefele, Head of the Hong Kong Konrad-Adenauer Foundation was organizing this part of the event.

From the left above: Manfred Fischedick, Andreas Oberheitmann and Eric Chung.

Above: GLO Fellows Christopher Parsons, Almas Heshmati, Venkatachalam Anbumozhi, and Xi Chen under the observation of Peter Hefele, Head of the Hong Kong basis of the Konrad-Adenauer Foundation.

GLO experts debating at the German Chamber of Commerce in Hong Kong about the consequences of climate change for business and humanity:
– Xi Cheng, Professor at Yale University and GLO Cluster Lead “Environment and Human Resources”.
– Almas Heshmati, Professor at Jönköping International Business School, Sogang University and GLO, Sweden/South Korea, and GLO Cluster Lead “Green Employment Creation”.
– Andreas Oberheitmann, Professor at FOM, RWI and GLO.
– Christopher Parsons, Professor at the University of Western Australia and GLO.
– Venkatachalam Anbumozhi, Senior Economist at the Economic Research Institute for ASEAN and East Asia (ERIA) and GLO.
– Klaus F. Zimmermann, Professor at Bonn University (em.),  Honorary Professor at the Renmin University of China, UNU-MERIT, and President of the GLO

Wolfgang Ehmann, Manfred Fischedick and Andreas Oberheitmann (from the left).

PROGRAM; FRIDAY, 2ND NOVEMBER 2018
8:30 Breakfast Discussion (in cooperation with the German Chamber of Commerce)
Climate Change and Human Responses: How to prepare for Change?
Venue: German Chamber of Commerce, 3601, Tower One, Lippo Centre,
89 Queensway, Admiralty, Hong Kong
Chair: Andreas OBERHEITMANN, FOM, RWI and GLO
Welcoming Remarks
– Wolfgang EHMANN, German Chamber of Commerce
– Klaus F. ZIMMERMANN, UNU-MERIT, Maastricht University and GLO
Keynote Speeches (10 min each)
– Wolfgang EHMANN, Wuppertal Institute for Climate, Energy and Environment
– Eric CHONG, President and CEO of Siemens Ltd. Hong Kong; Member of the
Board of Directors of Business Environment Council (BEC), Hong Kong
Q&A
10:00 End of Event

The three organizers of the joint FOM-GLO-KAS Conference on “Climate Change and Human Responses” at the Hong Kong basis of the German Konrad Adenauer Foundation: Peter Hefele, Klaus F. Zimmermann and Andreas Oberheitmann.

Ends;

MORE DETAILS – Content and Order

GLO Fellow Mariacristina Rossi is Associate Professor of Economics at the University of Turin, Italy. Her research interests include intertemporal saving and consumption choices, household finance, development and gender economics.

GLO Fellow Mariacristina Rossi

GLO Fellow Eva M. Sierminska is Senior Researcher at the Luxembourg Institute of Socio-Economic Research, Luxembourg. She is a labor economist and has extensive research experience in the area of labor markets, inequality, household finance and population economics.

GLO Fellow Eva M. Sierminska

Comments on the book cover:

‘Recently, economists studying wellbeing have widened their lenses beyond income to include wealth. Here, economists Rossi and Sierminska tap new high-quality datasets to assess how wealth and homeownership vary across countries, over time, and among household types. Economists and policy-makers interested in wealth will find much of interest in this book.’
—Janet C. Gornick, City University of New York, USA

‘This book attacks crucial issues, presenting well-documented facts and rigid analysis. It reveals time-trends and cross-national differences and explains the decisive role of wealth accumulation over lifetimes.’
—Klaus F. Zimmermann, Maastricht University, the Netherlands

Klaus F. Zimmermann (UNU-MERIT, Maastricht) is also President of the GLO.

Ends;

Federico H. Gutierrez: The Inter-generational Fertility Effect of an Abortion Ban: Understanding the Role of Inherited Wealth and Preferences, GLO Discussion Paper No. 167.  FREE DOWNLOAD.

ABSTRACT

Complete list of all GLO DPs downloadable for free.

Ends;

In this tradition, a new scientific study forthcoming in the Journal of Population Economics investigates the impact of restrictions on cultural assimilation. If those migrants with a stronger affection to the culture of origin are more temporary, more of them stay even permanently, and restrictions may lead to a slower cultural assimilation into the host country, among them or even in the next generation. The new paper studies the impact on second-generation cultural assimilation in this context.

THE PAPER:

Immigration restrictions and second-generation cultural assimilation: theory and quasi-experimental evidence

by Fausto Galli & Giuseppe Russo

Fausto Galli is at the Dipartimento di Scienze Economiche e Statistiche, Universita’ di Salerno, Fisciano, Italy

GLO Fellow Giuseppe Russo is at the Dipartimento di Scienze Economiche e Statistiche, Universita’ di Salerno, Fisciano, Italy and at the Centre for Studies in Economics and Finance (CSEF), Napoli, Italy

Website Link. Accepted for publication, forthcoming in the Journal of Population Economics. Available online. https://doi.org/10.1007/s00148-018-0694-z

The Journal of Population Economics is supported by the Global Labor Organization (GLO).

ABSTRACT

We study the effects of immigration restrictions on the cultural assimilation of second-generation migrants. In our theoretical model, when mobility is free, individuals with a stronger taste for their native culture migrate temporarily. When immigration is restricted, however, these individuals are incentivized to relocate permanently. Permanent emigrants procreate in the destination country and convey their cultural traits to the second generation, who will therefore find assimilation harder. We test this prediction by using the 1973 immigration ban in Germany (Anwerbestopp) as a quasi-experiment. Since the ban only concerned immigrants from countries outside the European Economic Community, they act as a treatment group. According to our estimates, the Anwerbestopp has reduced the cultural assimilation of the second generation. This result demonstrated robustness to several checks. We conclude that restrictive immigration policies may have the unintended consequence of delaying the intergenerational process of cultural assimilation.

The responsible editor has been Klaus F. Zimmermann.

Ends;

Klaus F. Zimmermann, Professor of Economics and President of the Global Labor Organization (GLO), expresses his own opinion here. He was interviewed on this issue on March 21/22, 2018 in the “RTL Nachtmagazin“, a prominent German TV Newsmagazin.

Ends;

Migration and Integration Policies in the New Austrian Government Contract

The expert panel consisted of Robert Holzmann, Ursula Struppe, Franz Wolf and Klaus F. Zimmermann. The moderator was Andreas Kresbach, and the organizer (and well-known head of DIE WEIS[S]E WIRTSCHAFT), Peter Brandner.

Klaus F. Zimmermann is a Professor of Economics, the President of the Global Labor Organization (GLO), a Co-Director of POP at UNU-MERIT and affiliated with Maastricht University and Bonn University. He has been a frequent advisor of various governments around the globe, the EU Commission, the World Bank and the OECD, and the Inter-American Development Bank.  He also had served as President of the German Institute for Economic Research (DIW Berlin) and the Founding Director of the Institute for the Study of Labor (IZA) in Bonn.

The Policy Panel with the moderator (from the left: Robert Holzmann, Ursula Struppe, Andreas Kresbach, Klaus F. Zimmermann and Franz Wolf)

Video documentation of the event (in German).

Examining the plans in the Austrian government contract and comparing it with the plans for the German government, Zimmermann had based his various comments on the Vienna Panel on:

• Austria and Germany face similar challenges and it is not surprising that the issues covered in both government contracts are pretty similar. In fact, already the number of pages of both documents are about the same (about 180 pages). The Austrian government is based on a collaboration between the (Christian Democratic) center-right People’s Party with the far-right Freedom Party affiliated with the recent European populist movements. In Germany, the newly planned government contract has been negotiated between the (Christian Democratic) Conservatives, the CDU, and the Social Democratic Party, SPD. While the CDU has become closer to the SPD on various themes, the Bavarian conservatives, the CSU, are challenged stronger by the attempt to deal with these recent populist movements.
• Both government contracts seem to assume that the refugee and the labor migration issues can be separated. It cannot. By re-establishing a fortress policy towards refugees, it seems difficult to signal openness for labor migrants at the same time. A false dream is that one could copy the rough refugee and the successful labor immigration policies of Australia. While neither Austria nor Germany are islands and face (like Australia) a strong excess – supply of economic migrants and a long -established image as a promising immigration country. Also “flooded” by Asian immigrants, in particular Chinese, most of them currently come as students where they are the input into the generation of the second largest export good of Australia, university education.
•  The new Austrian government believes much stronger that in can protect its borders against refugees. At least, it promises its voters a larger number of concrete measures in Austria, in Europe and in the sending regions, even to engage on the migration routes in Africa. The German contract is much less concrete, although it wants to limit the refugee inflow to not repeat the 2015 experience. Whether it makes sense to promise the impossible as in the Austrian approach, reality will have to show. At least one should not expect that economic development measures would stop the migration pressure, development only makes illegal migration pressures stronger. Stricter border controls only lead to more permanent illegal immigrants, because people do not only come by boat but also as tourists, the overstay, and the borders in the South and the East of Europe cannot be fully closed. The German approach is more cautious, announcing to create two expert commissions to study “integration potentials” and “flight causes”.
• While the Austrian government plans refuse to show European solidarity with respect to the refugee issue, it is the German government contract that insists on a central role of Europe and a quota system for asylum seekers. The understanding of the role of Europe marks the strongest differences between Austria and Germany in the near future. Whether it makes sense to let Greece, Italy and potentially Spain, Bulgaria and Romania alone with future illegal migration pressures, will have to be seen. As in the past, they will allow migrants to move on, if necessary.
• Both contracts accept economic migration for work, but Austria seems to think that it can get its needed laborer further mainly from the European partners. In the past, Austria was able to attract needed workers from the European Union member countries, in particular from the new member states in the East. However, the labor markets of Poland, Romania and the Czech Republic are empty and can hardly fulfill such needs in the future. (See also a related website report.)
• While the Austria government still wants to develop a concept to organize and attract economic immigration more effectively, the German contract indicates a few channels and instruments by providing a number of keywords and is listing a number of categories which could be part of a potential point system in a new immigration law. The labor market, the universities and the apprenticeship system of Germany could operate as filters for such a policy; the Austrian government seems to be also sufficiently open for it.
• While Germany wants to strengthen integration and foster integration research, Austria is much more determined to monitor and supervise integration on all societal levels. The Austrian government plan also offers a transparent pathway to citizenship. Both governments intend to integrate refugees early in the labor market, but Germany is already ahead with already existing practical measures. The German contract has a more balanced view on the Islam, while the Austrian government wants to strictly oppose radical Islamism.

Klaus F. Zimmermann (UNU-MERIT and Maastricht University), who is also the President of the Global Labor Organization (GLO), used the visit to discuss various issues of joint interest with Bernhard Felderer (the former Director of the Institute for Advanced Studies, Vienna), and GLO Fellows Peter Brandner, Manfred Deistler and Robert Holzmann.

Klaus F. Zimmermann contributing to a well-attended public Policy Panel in Vienna in the Press Center Concordia.

Ends;

Yves Zenou (Monash University and GLO) in his office.

Asad Islam and Yves Zenou (both Monash University and GLO) with Klaus F. Zimmermann (left)

Discussion with GLO Fellows about research issues and publication strategies. From the left: Jaai Parasnis (Monash University), Wei Xiao (Southwestern University of Finance and Economics, China), Klaus F. Zimmermann, Asad Islam (Monash University), Choon Wang (Monash University), Chandarany Ouch (Cambodia Development Resource Institute, CDRI) and Sakiba Tasneem (Monash University).

Ends;

Klaus F. Zimmermann, Princeton University & UNU-MERIT, Maastricht, is President of the Global Labor Organization (GLO) and Editor-in-Chief of the Journal of Population Economics.

GLO Supporter the Journal of Population Economics has 2 articles in the top 15 articles most shared in the Social Web, 2 articles among the 15 top cited articles and 3 in the 15 highly downloaded articles reported in the Economic Stars 2017.

Enjoy free access to these articles!

Among the top 15 articles most shared in the Social Web:

Unconditional government social cash transfer in Africa does not increase fertility, by Tia Palermo, Sudhanshu Handa, Amber Peterman, Leah Prencipe, David Seidenfeld, on behalf of the Zambia CGP Evaluation Team, Journal of Population Economics October 2016, Volume 29, Issue 4,  pp 1083–1111.

Immigration and crime: evidence from victimization data, by Luca Nunziata, Journal of Population Economics July 2015, Volume 28, Issue 3,  pp 697–736.

Among the 15 top cited articles:

Migration and young child nutrition: evidence from rural China, by Ren Mu, Alan de Brauw, Journal of Population Economics July 2015, Volume 28, Issue 3,  pp 631–657.

Can’t buy mommy’s love? Universal childcare and children’s long-term cognitive development, by Christina Felfe, Natalia Nollenberger, Núria Rodríguez-Planas, Journal of Population Economics April 2015, Volume 28, Issue 2,  pp 393–422.

Among the 15 highly downloaded articles

Parental choice, neighbourhood segregation or cream skimming? An analysis of school segregation after a generalized choice reform, Anders Böhlmark, Helena Holmlund, Mikael Lindahl, Journal of Population Economics October 2016, Volume 29, Issue 4,  pp 1155–1190.

The importance of family background and neighborhood effects as determinants of crime, Karin Hederos Eriksson, Randi Hjalmarsson, Matthew J. Lindquist, Anna Sandberg, Journal of Population Economics January 2016, Volume 29, Issue 1,  pp 219–262.

Immigration and prices: quasi-experimental evidence from Syrian refugees in Turkey, by Binnur Balkan, Semih Tumen, Journal of Population Economics July 2016, Volume 29, Issue 3,  pp 657–686.

The Global Labor Organization (GLO) is affiliated with organizations and institutions with a thematic interest and a strong ambition to contribute to an effective global network and to benefit from it.

From the 2015 editorial board meeting of the Journal of Population Economics at Izmir University of Economics with Editor Sandro Cigno, Editor-in-Chief Klaus F. Zimmermann, Springer Editor Katharina Wetzel-Vandai, and Editor Erdal Tekin present (from the left).

Ends;