Compensation and Employment Impact of a Full-time MBA Program

The changing Master of Business Administration (MBA) marketplace and considerable direct and indirect costs for an MBA degree mean that school administrators and other stakeholders need a better understanding of what factors may influence the rate of return to their MBA programs. We investigated the...

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Bibliographic Details
Published in:International advances in economic research 2016-02, Vol.22 (1), p.49-63
Main Authors: Way, Megan, Gai, Yunwei, Polutnik, Lidija
Format: Article
Language:English
Subjects:
Academic degrees
Business education
Business schools
Careers
Compensation
Compensation and benefits
Economic aspects
Economic Growth
Economic models
Economic statistics
Economic theory
Economics
Economics and Finance
Employment
Entrance examinations
Graduate students
Higher education
Human capital
International Economics
Macroeconomics/Monetary Economics//Financial Economics
Master of business administration degree
MBA programs & graduates
Microeconomics
Schools
Students
Studies
Success
Wages & salaries
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Summary:The changing Master of Business Administration (MBA) marketplace and considerable direct and indirect costs for an MBA degree mean that school administrators and other stakeholders need a better understanding of what factors may influence the rate of return to their MBA programs. We investigated the potential of using analytical frameworks to identify those variables that may predict employment probabilities and starting salaries of full-time MBA graduates, in the context of a single, private MBA program. Our results suggest that for graduates of this particular program, pre-MBA salary and work experience in accounting, banking, finance, and consulting industries predicted higher post-MBA salary levels, as did having a liberal arts major as an undergraduate. Other human capital measures, such as Graduate Management Admission Test (GMAT) scores or elite undergraduate education, were not associated with higher employment probabilities or salary levels for this program’s students, while having an undergraduate business major was associated with lower employment probability. Although our study has limited inference to determine the value of an MBA education more generally, it has potentially important implications for administrators of MBA programs, who could gain useful insights on applying empirical analysis to their own programs. Although this process can be costly and time consuming without a supportive institutional environment, it could provide useful evidence-based guidelines for practice with substantial payoffs for both the program and the students.
ISSN:1083-0898
1573-966X
DOI:10.1007/s11294-015-9561-9