Research

Inequality and its consequences have defined the economic landscape at least since the financial crisis in 2008. In our research, we address the question of what consequences increasing inequality has for the state. In particular, we ask ourselves how the state tax and transfer system should be designed so that it is optimally adapted to an unequal society.

A second pillar of our research in the area of inequality deals with the_{carbon footprint} of households. In particular, we ask how unequal_{CO2 emissions} are distributed across countries and households and what the consequences are for environmental policy measures.

Questions:

• How much should the state redistribute through its tax system?
• Does redistribution in the pension system make sense and how should a redistributive pension system be organised?
• How should inequality in the life expectancy of different income groups be assessed?
• How unequally are CO2 emissions distributed across different countries and between different households? What are the inequality effects of a_{CO2 price}?

Experts in our team:

• Prof Dr Fabian Kindermann
• Nicole Berr, M.Sc.
• Sebastian Kunz, M.Sc.

External cooperation partners:

• Prof Dirk Krueger (University of Pennsylvania)
• Dr Julia Le Blanc (JRC of the European Commission)
• Dr Luca Onorante (JRC of the European Commission)

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Family economics attempts to understand and model economic decision-making processes within the family. Such decision-making processes concern, for example, the labour supply of two family members, the decision for or against having children or the formation of savings. In our research, we use current household data to draw a more accurate picture of these decision-making processes. In particular, we take into account the preferences and ambitions of several household members who are potentially in conflict with each other. The new decision-making models developed in this way provide key insights for the design of family policy measures.

Questions:

• What role do negotiations between partners about having children play?
• What role does the motherhood penalty play?
• How can births be effectively subsidised by the state?
• What influence does divorce law have on family decisions?

Experts in our team:

• Prof Dr Fabian Kindermann
• Dr Veronika Püschel

External cooperation partners:

• Prof Matthias Doepke (London School of Economics)
• Prof Michele Tertilt (University of Mannheim)
• Prof Nicola Fuchs-Schündeln (Berlin Science Centre)
• Prof Anne Hannusch (University of Bonn)
• Leon Huetsch (Université de Lausanne)

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Wealth is distributed much more unevenly than income or consumption, for example. The aim of our research is to understand how individual saving and investment behaviour influences household wealth accumulation. Government incentives for wealth accumulation, for example, play a central role here. But the functioning of housing markets is also a key determinant of wealth inequality.

Questions:

• How do housing and rental markets influence wealth inequality?
• How do recessions influence the wealth and investment decisions of households? And what are the feedback effects on the labour market?
• What influence do government savings incentives (e.g. through the 401(k) programme in the USA) have on individual wealth accumulation and financial knowledge?
• Can rational decision-making models explain the savings behaviour of households? And if not, which cognitive frictions play a particular role?
• What role do inheritances play in wealth accumulation?

Experts in our team:

• Prof Dr Fabian Kindermann
• Dr Johannes Huber
• Sebastian Kunz, M.Sc.

External cooperation partners:

• Prof Dirk Krueger (University of Pennsylvania)
• Prof Krzysztof Makarski (Warsaw School of Economics and GRAPE)
• Prof Joanna Tyrowicz (University of Warsaw and GRAPE)
• Dr Charlotte Bartels (DIW Berlin)
• Prof. Dr Bertrand Garbinti (CREST)
• Prof. Dr Jonathan Goupille-Lebret (ENS Lyon)

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Expectations about future prices play a central role in household decisions. Expectations about inflation are just as relevant as expectations about the prices of financial investments. In our research, we analyse the determinants of price expectations at the individual level and identify differences in the formation of expectations across different household types.

Research questions:

• What expectations do households form about house prices in a house price boom?
• Do renters and homeowners have different expectations and if so, why?
• How do households in different countries assess future inflation rates?
• Does this assessment differ between individuals of different genders? And if so, why?
• What role does the distribution of tasks within the household play in the formation of expectations?

Experts in our team:

• Prof Dr Fabian Kindermann

External cooperation partners:

• Prof Monika Piazzesi (Stanford University)
• Prof Martin Schneider (Stanford University)
• Prof Michael Weber (University of Chicago)
• Dr Julia Le Blanc (JRC of the European Commission)

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