Does Germany pay too much? What the New Economic Geography can teach German policy-makers in their the negotiations on the EU budget

For the period from 2007 to 2013, the EU Commission has requested a higher budget, which would mean a greater load for the net-payer countries. Prof. Norbert Berthold and Dr. Michael Neumann, University of Würzburg, examine the question of whether Germany as a net contributor should oppose the Commission's plans. The focus is not only on Germany as a whole but also on structurally weak areas in Germany that receive special assistance. Are the European polices really working here? The authors come to the conclusion that European regional policies also have negative effects on the political markets of the member states - and consequently also on unemployment: In the case of collectively bargained wages, European structural policy produces an unwanted result for the assisted periphery areas. Financial relief for periphery areas by means of structure funds in combination with agglomeration areas, nationally undifferentiated wages and minimum migration can explain the high unemployment in many structurally weak areas of Europe. Interregional redistribution to the benefit of immobile employees in the fringe areas of the large European states makes funds available so that they do not migrate and are not forced to accept lower wages. But only lower wages would help them overcome their disadvantages as workers in peripheral regions. In this regard European redistribution only superficially helps the structurally weak areas in Germany. They also ensure the cementing of existing differences on a long-term basis. Germany is thus not only a net loser with regard to the EU budget; also its poor areas are placed at a disadvantage even though they are net transfer recipients.