| This research, consisting of four related papers, is an investigation into the effects of an MBA education. The work contributes to a larger research literature which attempts to better understand the nature and labor market effects of education and the determinants of educational attainment. The study of MBAs is useful toward this end due to the existence of a unique and relatively comprehensive data set which focuses on individuals interested in obtaining an MBA, and due to the prior work experience of MBAs, which allows for measures of pre-schooling productivity.; The first chapter (written with Peter Arcidiacono and Jane Cooley) focuses specifically on the economic returns to an MBA. By exploiting the existence of pre- and post-MBA wages, a fixed effects procedure is used to eliminate time-invariant unobserved heterogeneity, a problem which has long plagued researchers attempting to estimate the returns to schooling. The procedure demonstrably reduces the positive ability bias associated with most MBAs, but uncovers a negative ability bias associated with certain types of programs.; The second paper analyzes MBA outcomes by simultaneously modeling earnings and managerial position. Despite estimated positive returns to the degree on earnings, a negative reduced form effect of the MBA on managerial attainment is documented, a robust finding that is especially puzzling since managerial status and earnings are highly positively correlated. A model incorporating heterogeneous preferences over earnings and managerial status and unobserved, heterogeneous tournaments or job "tracks" is presented which can explain these findings. The empirical strategy allows for workers to select into tracks based on their observable characteristics. Estimation produces a positive overall effect of an MBA, and demonstrates the existence of a compensating differential between tournament types.; The third chapter tests between the human capital and screening theories of education. The test is based on the prediction that under the existence of screening, the returns to the degree will be negatively associated with length of pre-MBA experience. The methodology also allows for estimation of the extent to which screening value and human capital accumulation each contribute to the returns to the degree. Results support the idea that much of the return to the MBA degree is due to signaling of productivity.; The fourth chapter departs somewhat from the first three by focusing on the effect of individuals' ethical standards on earnings, both separate from and derived from an MBA education. Results differ substantially between males and females, with lower ethical standards being more beneficial (in the sense of augmenting one's wage) to males than to females. |
