Returns to Field of Study Versus School Quality: Mba Selection on Observed and Unobserved Heterogeneity

Abstract

While a substantial literature has established returns to college major and to school quality, we offer the first such estimates for Master's of Business Administration (MBAs). To control for their nonrandom selection of fields, we estimate the returns to MBA concentrations using both ordinary least squares (OLS) with detailed control variables and including individual fixed effects. We find approximately 7% returns for most MBAs but roughly double that for finance and management information systems (MIS). Thus, MBA area of study can matter as much or more than program quality: only attending a top 10, but not 11-25, MBA program trumped studying finance and MIS at a nontop 25 program. (JEL I21, J30, J24)

The impact of MBA programme attributes on post-MBA salaries†

“…better ranked universities perform better, as also reported in the results of Grove and Hussey (2011). This suggests that the way that university rankings are defined does not materially change the results.…”

“…Hence in line with the approach used by Grove and Hussey (2011), the regressions were rerun instead using dummy variables to indicate whether an institution was ranked 1-10, or 11-25 in the Which MBA Guide. We found results that were similar to those reported in Tables 3 and 4, i.e.…”

“…More recently, Arcidiacono et al (2008) and Grove and Hussey (2011) estimate the financial returns to an MBA, with Grove and Hussey (2014) considering school and individual factors impacting on returns to an MBA. To date this more recent literature focuses predominantly on the impact of individual student characteristics as in the broader literature on financial returns to education, using individual student and alumni data collated by the GMAC.…”

Worker mobility, employer-provided general training, and the choice of graduate education

“…This result can be related to other studies of the return to an MBA, such as Arcidiacono et al (2008) and Grove and Hussey (2011), which demonstrate that the return to part-time MBA programs is lower. The difference between the observed return to part-time and fulltime programs is not always statistically significant in these studies, particularly when the authors include fixed effects in the specifications.…”

The Analysis of Field Choice in College and Graduate School: Determinants and Wage Effects

“…,Grove & Hussey (2011) examine44 The regression estimate based on the NCES inTable 6is 0.284 for obtaining any MBA. The NCES covers a much broader population and does not have information on test scores and grades.…”