The Economic Returns to an Mba*

Abstract

Because MBA programs require work experience before admittance, prior wages can be exploited to disentangle the return to the degree from unobserved productivity. We find that controlling for individual fixed effects generally reduces the estimated returns to an MBA, particularly for those in top programs. However, for full-time MBA students attending schools outside of the top-25 the estimated returns are higher when we control for individual fixed effects. We show that there is some evidence that those who take the GMAT but do not obtain an MBA are stronger in dimensions such as workplace skills that are not easily measured.

The effect of ethics on labor market success: Evidence from MBAs

“…15 Other results are worth mentioning. Estimates of the returns to an MBA degree are consistent with those found by Arcidiacono et al (2008), who focus on estimating the economic return to an MBA using the same data. 16 Economic returns are non-existent for full-time programs outside the top 25, but returns to executive programs or programs within the top 25 are substantial.…”

“…5 Career paths of MBAs (as well as those who considered but did not attend MBA programs) are likely to differ by gender. While Arcidiacono et al (2008) find only small gender differences in estimates of short-term returns to a broad class of MBAs, other studies cite large earnings differentials of graduates. Bertrand et al (2010), for example, cite the gender earnings differential of University of Chicago MBAs to be as high as 60% over 10 years after graduation.…”

Student loans or marriage? A look at the highly educated

“…There are 869 males and 650 females in the sample who enrolled in an MBA program by the last installment of the survey. 14 In the sample used for this study, MBA enrollment tends to occur before marriage, other studies using this survey, see Montgomery and Powell (2003) and Arcidiacono, Cooley, and Hussey (2008) . 11 According to data from the 2012 National Postsecondary Student Aid Study , 57% of MBA graduates borrowed for their graduate education in 2012, and the average amount per borrower was $38,700 ( http://trends.collegeboard.org/student-aid/figures-tables/ masters-degree-recipient-debt-percentage-average-borrowed-2011-12 [Accessed March 20, 2015]).…”

Promotion, Turnover, and Compensation in the Executive Labor Market

“…Figure S-1(b) shows the expected pay, risk premium, and agency cost components by education. As Arcidiacono, Cooley, and Hussey (2008) noted, the return to an MBA degree is usually contaminated by the benefits of previous work experience, a requirement of many MBA programs. Our study does, however, shed light on the long-term benefits of a general business education versus a more specialized degree.…”