Abstract Extending working hours could help stabilise the labour supply. At the same time, investments in technological and organisational progress are needed to increase labour productivity. The answer to the question of how to preserve prosperity in Germany is therefore a “both–and,” not an “either–or.” Recent technological developments in the field of artificial intelligence are reviving the old dream of more leisure time and less work through automation. However, existing empirical evidence suggests that the use of AI and human capital is generally complementary.
Abstract The reform of property tax following the 2018 ruling by the Federal Constitutional Court marks a profound institutional shift in the German tax and federal system. It not only brings an end to a decades-long deadlock on reform, but also leads to a significant re-differentiation of property tax law between the federal states. This article analyses the reform of property tax in the context of its historical development, explains the key milestones and, in particular, highlights the institutional breaks and continuities that are crucial for assessing the current reform.
Abstract When the COVID pandemic broke out, firms and employees had to experiment with new forms of working, such as working from home (WFH). A representative survey among German firms in two sectors (information economy and manufacturing industry) shows that the share of firms that use WFH practices for at least some of their employees did not decrease substantially after the pandemic had ended but stabilised at a high level. The survey data reveals differences by industry as well as by firm size. Due to the higher suitability of tasks in information-intensive jobs, the use of WFH is more prevalent in firms belonging to the information economy compared to manufacturing firms. Moreover, the data shows that within larger firms the share of WFH users is higher compared to smaller firms. As the share of firms using WFH did not substantially decrease, even years after the pandemic, it is expected to stay a substantial part of the work environment. Firms’ expectations for 2027 suggest a slight increase in the share of firms using WFH.
Abstract Social long-term care insurance (LTC) has a twofold financing problem: a rising contribution rate and rising co-payments. Without measures to limit them, co-payments in the first year of nursing home care would rise to more than € 5,500 by 2035 – with a social assistance recipient rate of more than 44 %. In order to limit co-payments as promised in the coalition agreement, the federal-state working group on LTC reform is focusing on two options: benefit indexation and an absolute co-payment cap. However, only the second option is suitable for achieving the desired goals. This will result in additional LTC expenditure, which will require refinancing measures if the contribution rate is not to increase.
Abstract RESourceEU intends to rapidly de-risk from Chinese critical raw materials (CRM). Via the action plan, the EU Commission wants to improve CRM-stockpiling, promote strategic CRM-projects, significantly increase CRM-recycling, fight market failure as well as distorted competition and expand partnerships with third countries. More stockpiling, project subsidies, recycling and global agreements seem particularly useful. Additional EU coordination and ongoing small-scale CRM-subsidies appear less effective.
Abstract Since the 2000s, house prices in Germany have outpaced household incomes, with significant consequences for housing affordability. While low interest rates have partly offset the monthly burden of mortgage servicing, they have not reduced the growing barrier to market entry. The central obstacle to homeownership has therefore shifted from recurring mortgage payments to upfront cash requirements. As a result, access to homeownership depends increasingly on pre-existing wealth. Regional evidence further shows that this national trend is highly uneven across space, reflecting substantial variation in local prices, incomes, financing conditions, and acquisition costs. For many households, especially those without substantial savings or family support, the challenge is no longer primarily whether they can service a mortgage, but whether they can enter the market at all. Policies aimed only at lowering monthly financing costs therefore miss the main constraint facing wealth-poor households. Measures that reduce one-time entry costs would address the more policy-relevant dimension of today’s affordability problem.
Abstract Climate policy in Germany and Europe is based on assumptions that are no longer tenable under the new geopolitical, economic and technological conditions. Without a rethink, the EU risks jeopardising its own goals. This article shows how rising costs, intensified global technological competition and security challenges are changing the requirements for the energy transition. It is not the transformation goals that are in question, but the design of the transition pathway, which must be more strongly oriented towards efficiency, resilience and realistic development paths. To this end, security of supply, systemic coordination and pragmatic bridging solutions should be brought more firmly into the focus of political decision-making. Drawing on seven areas of action, the paper outlines how energy, economic and security policies can be better integrated to simultaneously strengthen climate protection, competitiveness and resilience.
Abstract Linking the statutory retirement age to life expectancy is widely seen as a rule-based response to demographic change to enhance long-term stability through automatic adjustments. However, empirical evidence suggests that political decision-making is not eliminated but redirected to the rule’s design and implementation. Moreover, differences in health and life expectancy may result in uneven social effects from uniform retirement age increases. The analysis shows that the sustainability of the policy measure depends on institutional context, including labour market conditions, preventive and rehabilitative policies, and effective disability protection, making automatic adjustment a politically embedded rather than purely technical reform.
Abstract Energy productivity in Germany has risen in recent years. To what extent does this indicate a transformation of the energy system and production? This paper shows that the rise in energy productivity is only partly attributable to efficiency gains within sectors, but is also driven by structural change and the decline in energy-intensive production. A projection of final energy demand until 2030 suggests that policy targets may be met under weak economic growth. However, stronger growth would lead to a substantial overshooting of these targets. This reveals a fundamental trade-off between reducing energy consumption and maintaining economic growth, which is difficult to resolve without additional efficiency gains or technological progress.
Abstract In view of demographic ageing, social long-term care insurance is facing growing financial and structural challenges. Rising contribution rates, increasing co-payments and a sharp rise in demand for care services in the future raise the question of how sustainable financing and adequate provision can be ensured in long-term care. This article examines reform approaches for stable contribution rate financing with an introduction to partial capital cover and a stronger focus on benefits for existential care risks. It also analyses how more competition, less regulation, greater investment incentives for private capital and productivity-enhancing measures in the inpatient care sector can contribute to expanding supply and curbing costs.
