Basic principle

Public economics is the study of the role of the government in market economies. In particular, it examines how the government influences the economy by its revenue and expenditure policies. Because of the significant level of governmental interventions in economic systems through the tax-and- transfer system, public economics plays an important role in the analysis of modern economies.

The structural change of most developed economies due to the demographic change and globalization poses new challenges for economic and social policy, requiring a skillful balancing of the potentials of unregulated markets and the need for governmental interventions. Hence, research at the Chair of Public Economics focuses on the analysis of the optimal design and implementation of fiscal and social institutions in the context of economic change.

We examine which governmental interventions are useful for dealing with structural economic and social changes in a sustainable way, keeping in mind the demands of efficiency and equity. The normative analysis deals mainly with the optimal design of tax-and-transfer systems in dynamic economies. Furthermore, we aim at linking behavioral economics, which uses methods of experimental and empirical economic research, with the theory of public economics to find new answers to the problems faced by fiscal and social policy.

The positive analysis of governmental interventions in the labor market and the welfare system forms the second main research area of the Chair of Public Economics. Policies or policy proposals which are currently implemented or discussed in public are evaluated on the basis of their economic effects. Due to the integrative approach of the Magdeburg Faculty of Economics and Management, we link the results of normative and positive research and prepare them in way that makes them useful for a constructive “Policy Consulting”.

Research Focus

  • Labor market and social policy
  • The influence of economic determinants on subjective well-being (Economics of Happiness)
  • Economic effects of social norms
  • Employment in the low-pay sector
  • The effect of interventions in competitive wage formation ( e.g. wage subsidies, minimum wage)
  • Modeling of labor union wage negotiations
  • Depletion of natural resources with uncertain property rights


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