The looming closure of one of Europe’s leading labour-market think-tanks has sparked an outcry among economists, who warn that the move will mark a major setback for policymaking.
The Bonn-based IZA Institute of Labour Economics is set to close at the end of December after its main financial backer, Deutsche Post Foundation, a non-profit institution set up by state-owned logistics group Deutsche Post DHL, announced on Monday that it will “discontinue” the IZA’s “operations”.
The think-tank lies at the centre of a global network of 1,700 economists, who published close to 18,000 research papers in its working paper series.
Its demise will be a “very serious loss” for economics research in Europe, economics Nobel laureate David Card told the Financial Times, warning that it will have “a very negative impact on younger scholars”.
Card, who became an IZA research fellow in 1999, is one of five winners of the Nobel Prize in economics among its researchers.
“Quite a few prominent [economists] had a job at IZA at the start of their careers,” he said, adding that IZA working papers and conferences were “a vital way to connect to other researchers and to stay active and up to date”.
Bernd Fitzenberger, director of Germany’s Institute for Employment Research, told the FT that IZA helped make the country’s research into labour economics globally competitive. Its closure was “quite unfortunate” as it “played a pivotal role for the development of many junior labour economists,” Fitzenberger said.
The University of Bonn told the FT that it had been “surprised” by the decision to close IZA and had not been involved in previous talks.
“The move is regrettable,” a spokesperson for the university said, pointing to its “many academic links” with the think-tank.
The think-tank faced controversy in recent years following its decision to replace former CEO Simon Jäger with behavioural economist Armin Falk.
Hundreds of research fellows then signed an open letter protesting against the planned appointment of Falk. After Falk withdrew from the IZA leadership race in late 2023, the think-tank did not appoint a new CEO.
Falk had previously faced allegations of sexual misconduct but was fully exonerated by an independent investigation conducted on behalf of Bonn University. Falk declined to comment.
Jäger resigned after less than two years in the post in response to controversial restructuring plans that cast doubt on the think-tank’s financial viability. Jäger, now a professor at Princeton, declined to comment on the news of IZA’s closure.
The think-tank had already halved its number of employees from 59 in 2023 to around 30.
David Blanchflower, economics professor at Dartmouth College, wrote on Bluesky that IZA had “basically closed down a year ago” after the leadership crisis and had done “next to nothing” since.
IZA had been funded directly by Deutsche Post DHL through its charitable foundation for more than two decades. But the links between the company and the think-tank were severed in 2022 when a governance shake-up meant Deutsche Post Foundation began operating independently from the company.
The foundation announced this week that it will rename itself Foundation Global Sustainability and will focus on funding external research climate change, nature and sustainability issues, rather than running its own think-tank.
Lisa Spantig, a lecturer in economics at the University of Essex, said on Bluesky IZA was “one of the more prominent and internationally visible economic research institutes we have in Germany”. Tim Martens, an assistant professor at Bocconi University in Milan, called the decision to close IZA “terribly short-sighted”.
IZA’s remaining research staff are likely to lose their jobs, while the think-tank will abandon its offices overlooking the Rhine in the former West German capital. It is now scrambling to find “alternative funding sources, partnerships, and organisational models” to preserve the virtual network. “The goal is to present the results in June 2025,” the foundation said without disclosing details.
The foundation and IZA both declined to comment. Deutsche Post told the FT it was not involved in the decision as the foundation acted independently.
Card, who shared the 2021 Nobel Prize in economics, also pointed to the recent announcement by the National Bureau of Economic Research in the US to reduce its funding in a response to budget cuts imposed by the new US administration. “These are bad times for my field.”
