Topics for Mastertheses

Here are research topics for Mastertheses. In principle, all topics covered in lectures or seminars of the chair can be elaborated on in theses.

More specifically, here are some suggestions.

 

• Are societies divided and if yes, how much?

The world towards the end of 2023 seems to become less stable. Societies have been argued for a while to become more heterogeneous. Extremist thinking seems to become more widespread and inequalities seem to persist or rise. It is the objective of this Master thesis to find out what the divisive forces are, whether they are as strong as is sometimes suggested (see a discussion in German) and how the degree of division can be measured. Obvious measures are based on the income distribution, the distribution of wealth, on hours worked, political views, religious or cultural background and the like. Some preparatory conceptional thinking on what "division of society" means seems advisable.

• Rich and happy with family?

Modern families select themselves into one of three family models: traditional model (husband works, wife is at home), modern model (both work, both are at home) and "Zugewinnermodell" (one works, the other works a bit but is mainly at home). The GSOEP has data on families, income of parents, number of children and the like. The master thesis studies how the shares of family models change over time and how the family model changes within a family over time. It also studies how measures of income and well-being evolve over time. The corresponding economic literature ('family economics') and the literature beyond is employed to understand these findings. Conservative or pessimistic commentators claim that the modern model corresponds to a prisoners' dilemma.  Data is available at the chair. The thesis might help students to select their subjectively optimal family model.

• The great resignation

There is a discussion about rising "resignation rates" as shown in the following picture ...

... borrowed from Wikipedia. The picture and discussion around this observation suggests that there is a structural break in the labour-leisure choice of inhabitants of the USA as a consequence of the pandemic.

Understanding this claim in terms of modern labour economics would look at the flows out of employment in more detail. Where do employed people go? Is there a transition into unemployment or do they leave the labour force? If yes, do they move into retirement (at "regular" age) or into home-production or other?

It is the objective of this master thesis to study these flows in detail (using German data). The larger question asks to what extent the lack of (skilled) workers is due to this great resignation.

• Generation Z and all the rest - what do we know?

There is a lot of discussion about different types of generations and their attitudes towards life. Following the generation of "baby boomers" up to the mid of the 1960s, there was a generation X, generation Y and so on. Career advise is based on years of birth, advise for potential employers follows from being part of a certain generation and so on. The objective of this master thesis consists in finding out how reliable these attributions are. What do we know about changes in attitudes over time? How dispersed is a distribution of some attitude within a generation? In other words, how informative is an average characteristic of a generation for one individual?

The thesis looks at periodic surveys about youth attitudes Shell Youth Study, inquires into the methods employed by these studies, summarizes scientific analyses based on these surveys and inquires into the economic significance of these findings. Can we meaningfully draw any distinction between belonging to a generation and standard secular trends in an economy? Do labour supply decisions ("ambition") differ across generations within a firm? Do attributes of generations add to well-understood list of determinants of wage income, job choice or health? Theses are some of the questions the master thesis will attempt to answer.

• The effects of cognitive and non-cognitive skills

Professional economic success is certainly influenced by the educational background of an individual. Acquired professional skills matter, more fundamental cognitive skills also play a role, as measured e.g. by IQ tests. At the same time, professional success (measured e.g. by annual labour income) also depends on non-cognitive skills. The latter can be described by the personality of a person as captured e.g. by the "Big 5" in personality psychology. Analysis by Heckman and Kautz (2012), Borghans et al (2008) or Heckman et al. (2006) summarize and contribute to this literature by identifying many channels that support the above statements. They emphasize that, going beyond labour income, occupational choice or health of individuals are also influenced by non-cognitive skills. It is the objective of this Master thesis to summarize this literature, find more recent work and, if possible, add new insights.

• The economics of mental health

According to WHO (2008), mental illness accounts for more than one third of the total amount of illness. Mental health issues have strong detrimental effects on subjective well-being, labour market outcomes and the economy as a whole. Layard argues in a series of analyses (e.g. Layard et al., 2007, Layard, 2016) that treatment of mental illnesses would be self-financing in the sense that recovered individuals would produce more than the costs of their treatment. Illness leads to reduced labour supply even though treatment costs are lower than lost production. More at the individual level, treatment allows individuals to re-evaluate perceptions and beliefs and offers them a wider choice of behaviour. A presentation of central findings for the broader public is in Layard and Clark (2015). The objective of this master thesis consists in understanding the calculations behind these findings and replicating them for Germany.

• Personality and stress

Personality plays an important role in almost all aspects of stress processes. Traits such as neuroticism or extraversion have frequently been studied as causes of strains (e.g., burnout, main effect on strains) or stressor-strain relations (moderators of stressor effects). For example, people high in neuroticism exhibited higher strain such as increased anger or depressive symptoms at the end of the day or on the following days. Interestingly, recent meta-analytic research has revealed that strains impact more strongly on stressors (strain-effect) than the theoretically proposed effect of stressors and strain (stressor-effect). Moderators of the strain-effect have not been conceptually or empirically analysed, yet. The goal of this master's thesis is to examine personality as one such potential moderator.

The supervision of this master thesis will be undertaken in cooperation with colleagues from "Wirtschaftspädagogik".

• Emotional intelligence

Emotional intelligence can be defined as the abilities  (i) to be aware of emotional states of oneself and others and (ii) to employ this awareness for one's objectives (Mattingly and Kraiger, 2019). One can ask to what extent emotional intelligence contributes to professional success (see references in Mattingly and Kraiger, 2019) and to subjective well-being (Furnham and Christoforou, 2007). Educational system put a lot of emphasis on cognitive skills (maths, reading and writing in primary education and technical skills in secondary and tertiary education). The relative importance of cognitive skills vs. emotional skills for happiness can be studied (Furnham and Petrides, 2003) as well as the role of cognitive and non-cognitive skills on labour market and other outcomes (Heckman et al., 2006, Heckman and Kautz, 2012). A conceptual framework allowing to jointly study emotional and cognitive skills was developed by Tahir (2020, Master thesis, available upon request) and some more, very preliminary, background is in Wälde (2018).

The master thesis should list examples of emotional and cognitive skills, summarize knowledge about how these skills can be acquired, inquire into the reasons of the dominance of cognitive skills in the education system on the one hand and the high importance of emotional intelligence in HR programmes on the other and finally, if feasible, come up with a suggestion on the optimal share of time used for teaching emotional and cognitive skills in the educational system.

• Basic income - what are its effects?

Poverty has been and will remain a big problem of modern societies. An old suggestion to fight poverty consists in unconditional basic income. While there are a lot of arguments for and against it, it is hard to decide on a theoretical level which of the arguments is stronger. It is therefore highly informative to look at real world examples. Finnland introduced basic income (for some inhabitants) in 2018. Short newspaper reports in German and summaries in English provide a first idea.

The objective of this Master thesis consists in (i) collecting all information on basic income programs that were tested so far. The thesis would (ii) look at theoretical analyses of basic income and (iii) empirical studies that quantify the effects of basic income. Depending on time and interest, own research could also be undertaken.

• What makes you happy?

There is by now a long literature on happiness and its determinants. Some analyses study the importance of classic economic determinants of happiness (also called subjective well-being) like labour income, occupation, ethnic group or leisure activities. These factors are called environmental factors in the psychological literature. Some studies focus more on "inside factors" like personality traits and in fact conclude that these factors are more important for subjective well-being. In all of these studies, it is important to distinguish between overall life-satisfaction (as one measure of happiness) and instantaneous utility (i.e. instantaneous positive or negative affect). A relatively less researched area is the link between emotional intelligence and happiness.

It is the objective of this master thesis to jointly take stock of the various determinants of (various concepts of) happiness. One would ultimately like to provide an empirical framework (with theoretical foundation) that allows to quantify the relative importance of external and internal factors where the latter are split into personality factors (including IQ) and measures of emotional intelligence. This would allow to conclude which skills an education system should provide (some ideas and literature are available, more literature will be provided).

• The redistribution of GDP

Total output of an economy is divided among its inhabitants through a variety of mechanisms. They include redistribution via the state (pension, social security payments, public education) and redistribution via the market, i.e. via factor rewards for factors of production, typically labour and capital. While this is theoretically easy to understand, understanding the actual numbers is more involved. Who receives which share of total output (i.e. GDP) of a country in Germany (or any other country of interest)? While a classic share has been widely documented, the share of labour income in GDP, computing this share is very interesting. What is the role of inflation and how is inflation computed or which price index should be used are just three of the questions involved. Once the share of GDP going to labour is understood, the next question would be how total labour income can be split into hours worked and factor rewards per hour. Having done this would bridge the gap between the well-known stagnant real-wage index (e.g. for Germany) and the increase in GDP. Does total labour income increase only because people work more and more at constant real wages? Or do workers also profit from the increase in total factor productivity via rising wages. These are some of the questions a master thesis can answer.

• Why is Germany the Export World Champion?

Germany is known for its trade balance surplus. Almost ever since there is reliable data and for most years, Germany's value of exports exceeds the value of imports. When relating the export surplus to GDP, Germany has the highest export ratio among G7 but also among European countries in most of the recent years. This makes Germany a world champion in exporting.

Why does Germany export so much? Economic theory provides many potential answers to this question. Which of these answers are relevant for Germany and which are the most important channels quantitatively speaking? The thesis will start by describing the phenomenon of export surpluses empirically and by comparing surpluses among G7 and European countries. The main objective consists in quantifying the importance of the various channels in order to understand the reasons why Germany exports so much. If time and space permits, the thesis could also study whether any policy implications can be drawn from these findings.

• Principal-Agent models and the effort-reward-imbalance view

There is overwhelming empirical evidence from organizational and work psychology that the structure of work relationships and the role of the superior is crucial for well-being of workers. The appropriate theoretical framework to understand this would be the principal-agent model well-known in microeconomics. Students who like to bridge gaps are welcome to look at both of these prominent literatures and to see how findings in one can inform theory building in the other and how theory building can help understand empirical regularities better.

• Why do women earn less than men?

Facts, theories and explanationsIt is a well-known stylized fact that women earn less than men. How strong this effect is depends on the exact econometric model under consideration. There are two leading theories that can help understand the gender-gap: preference-driven discrimination and statistical discrimination. This thesis looks at how well theories and empirical regularities fit and whether some deeper answers than gender gap can be given.

• Unemployment in developing countries

The literature on employment and unemployment for high-income countries is relatively well developed. Search and matching models in the tradition of Diamond, Mortensen and Pissarides provide excellent theoretical frameworks to study data and understand the effects of business cycles, policy and other on the dynamics of unemployment. But what about low- and medium-income countries? If the big difference between the two groups consists in the existence or in the size of an informal sector, then one would like to understand not only how the unemployment rate evolves over time, but also, inter alia, what the determinants of the size of the informal sector is.

The objective of the Master thesis consists in finding out what these determinants are. A literature survey on theoretical and empirical work would be the starting point. Relevant references include Albrecht, Navarro and Vroman (2009), Ulyssea (2010), Meghir, Narita and Robin (2015) and Satchi and Temple (2009). Later, the thesis can continue by further developing theoretical models or undertaking independent empirical work.

• Media Violence and Real World Violence

There is evidence that exposure to violence in media (TV, movies, video games) is strongly linked to increases in aggression (Bushman and Anderson, 2001, 2002). At the same time, these facts have been debated (Anderson and Bushman, 2002) and the evidence is contested (Block and Crain, 2007). See also the reply by Bushman and Anderson (2007). This evidence is mainly based on data from the USA.

The objective of this Master thesis is to revisit the existing facts and to provide an overview of comparable data and studies for Europe and Germany. A distinction between public ("öffentlich-rechtlich") and private media would be of high interest.

• Behavioural macro

Behavioural macro is not yet as fully developed as one might wish. While there are many behavioural economics analyses, very few of them are embedded in a macro setup. The objective of theses in this area would consist in looking at behavioural models presented in various seminars and lectures (think of Macro II or Advanced Macro) and understand the effects of these broader views of human behaviour on economic growth, business cycles, unemployment or other. To make an example, how do cues or addiction influence savings behaviour and thereby growth or the reaction to business cycle shocks? Other topics that are related to psychology or behavioural economics and that can fruitfully be used for macro analyses are also welcome.

• Crime prevention

Economic theory of crime suggests that the decision to become criminal is a standard rational choice. Potential criminals compare expected utility from a criminal act to expected utility from not committing it. Depending on which value is higher, a criminal act will be observed or not. Now imagine society observes that there are "too many" criminal acts. (Or world society observes that there is too much aggression.) What is the optimal reaction? Increase punishment, increase the likelihood of being caught or improve outside options of criminals? As an example of the latter, imagine criminal behaviour depends on income inequality. To what extent should society (or its government) try to reduce income inequality and to what extent should punishment be increased? Going further and taking psychological determinants of a "criminal career" into account, how would optimal crime prevention programmes look like?

• Emotional Economics

More background on this topic is provided at www.waelde.com/cee or here, especially when looking at the pdf-file with the topics. There is also a survey on emotion research in economics.

• Intercultural differences

The background for this work is the survey available at www.worldvaluessurvey.org/. Students should like working with large datasets and should be interested in understanding why individuals that grew up in a continental European country are different from individuals that grew up in an anglo-saxon country. Regression analysis should be used to investigate the explanatory power of these differences. Some more general background is provided by Alberto Alesina and Paola Giuliano (2015) Culture and Institutions, Journal of Economic Literature, Vol. 53, Issue 4.

• Labour market research

This work would be based on analyses undertaken by Andrey Launov, Klaus Wälde and others. See www.waelde.com -> publications for details. A strong interest (not necessarily experience) in theory, estimation and programming (in matlab) is an advantage. Access to a "fast" server will be provided by σοφια.

• Emotions and happiness in marriage

Happiness is an important emotion. Being happy about one's relationship could be argued to be the most precious gift one can receive in life. It therefore seems sad that some argue (e.g. Laningham, Johnson and Amato, 2001) that happiness about one's marriage gradually falls over time. For romantic or not so romantic students interested in marriage and happiness from an empirical perspective, it might be of interest to know that the dataset for this paper is public and that there is a new wave available since this article appeared. The objective of this thesis would consist in (re-)evaluating the evidence concerning the existence of a negative duration effect.

• Bargaining theory

Bilateral discussions and negotiations take place daily if not hourly in everyone's life. How does the economic literature on bargaining model these negotiations? An overview of cooperative and non-cooperative approaches to bargaining should be given before extensions are taken into account. This is a topic suitable for an individual that likes models and modelbuilding. More details on potential extensions will be provided to interested students in person.

• Financial and real wealth

Whenever central banks publish numbers on financial wealth for a given country, they can be sure to receive a lot of public attention. "Financial wealth as high as never before" is one of the standard headings in newspapers. But what does financial wealth mean? Where does it come from? National accounting and standard economic reasoning would suggest that any increase in financial wealth (of one economic entity) goes hand in hand with an increase in debt (of another economic entity). If we then look at a country like Germany, Japan or Brasil (or any other country you might be interested in), what do these numbers of rising financial wealth mean? The thesis will start out by describing these numbers and continues by developing a theoretical model which allows studying the determinants of the evolution of financial wealth. It would conclude with a welfare analysis to come up with answers to the above questions.

• The unemployment paradox

Recent research in economics (Launov and Wälde, 2013 and especially 2015 has identified the so-called 'unemployment paradox'. It says that a rise in productivity of the public employment agency in helping unemployed workers find a job can actually increase the unemployment rate. This effect is not only a theoretical finding but was shown to be empirically relevant for Germany following the Hartz III reform.

The objective of this master thesis would consist in identifying and presenting the essential mechanism behind this paradox in the simplest possible theoretical framework. The latter would focus on one individual only and the measure of unemployment would be replaced by average duration in unemployment. Bayesian learning would also be absent. Knowledge of matlab or willingness to learn matlab would be essential. Guidance is provided and a huge learning potential for the student is certain.