The surprising resignation of the head of the Institute for the Study of Labor (IZA) after less than two years is causing a stir in the economist scene. The departure of Simon Jäger after such a short time is "difficult to comprehend" and a "great loss for the German political consulting scene," wrote the economist Monika Schnitzer on Friday evening on Platform X, formerly Twitter. The incident "casts a very bad image on the Post Foundation. The Düsseldorf economist Jens Südekum wrote on X: "I can't believe what I'm reading here." The decision was "completely inappropriate".

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Baden-Württemberg's Finance Minister Danyal Bayaz (Greens) also expressed regret and spoke of a "great loss", saying he hoped that Simon Jäger would "remain with us as an economist and political advisor". The economist Ulrike Malmendier and the chairwoman of the Verein für Socialpolitik, Regina Riphahn, also expressed regret.

The institute, which was founded in 1998 by the Deutsche Post Foundation and specializes in labor market research, announced on Friday that the award-winning economist Simon Jäger would leave the institute at the end of the year. Jäger had only taken over the management of the institute in spring 2022 at the age of 36 and was considered a great beacon of hope. Prior to his appointment, he had conducted research at the elite universities of Berkeley, Harvard, Stanford and the Massachusetts Institute of Technology (MIT), among others, and had been lured to Bonn by an elaborate search process.

In July, IZA celebrated its 25th anniversary in a big way, with Federal Minister of Labour Hubertus Heil (SPD) among the guests. The latest development is "a disaster for everyone involved," according to a person familiar with IZA. Jäger's reputation was tarnished, and the IZA Board of Trustees, as well as all other people involved in the appointment, were also counted. Simon Jäger did not want to comment on the matter on Monday when asked.

The background to the resignation is apparently budget cuts. The Deutsche Post Foundation, the sole shareholder of IZA, wants to reorganize its research institutes because it has fewer resources at its disposal in the long term. IZA is now to be merged with the Briq Institute ("Institute on Behavior & Inequality"), which is also based in Bonn. This institute had been split off from IZA only a few years ago. Now it is being reintegrated again.

To date, the Foundation has played a major role in the financing of both institutes. The current head of the Briq Institute, Armin Falk, is to take over as head of IZA from January 2024. The Bonn-based behavioral economist worked at IZA for several years before the spin-off. His research results caused a stir, and employers once wanted to make him head of the research institute of the employment agency. In the economist scene, however, Falk is quite controversial. Since its recognition in 1997, the Deutsche Post Foundation has received annual donations from Swiss Post, which were based on the logistics group's revenues and personnel costs. According to the foundation, around 2022 million euros were raised in 20.

However, this donation contract expired in 2022, i.e. 25 years after the foundation was established. This has been known for years, the foundation itself has been writing it on its website since at least the end of 2016, as can be seen from website archives. Under the heading "Financing", the foundation's website states that the task is "to build up foundation capital from the inflows and to generate sufficient income" so that "permanent and sustainable foundation work" is made possible even without the support of DHL Group. Some of the assets are invested in a fund, and at the beginning of the year, the return on investment was 5.3 percent, according to the foundation.

The foundation could not be reached for comment on Monday. Its president is the former head of Swiss Post, Klaus Zumwinkel, who is almost 80 years old. As long as his successor Frank Appel was at the helm of Swiss Post, the financing of the foundation and thus of IZA was considered secure. This spring, however, Appel handed over the chairmanship of the board to Tobias Meyer after 15 years. Now the cards are being reshuffled.