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Human capital augmentation versus the signaling value of MBA education

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  • Hussey, Andrew

Abstract

Panel data on MBA graduates is used in an attempt to empirically distinguish between human capital and signaling models of education. The existence of employment observations prior to MBA enrollment allows for the control of unobserved ability or selection into MBA programs (through the use of individual fixed effects). In addition, variation in the amount of pre-MBA work experience allows for a test to distinguish between the models. In particular, a predominant signaling view is shown to predict smaller returns to the degree, the more pre-MBA work experience one has (controlling for total experience). Additionally, a unique feature of the data is that respondents were asked to report skills or abilities gained through their schooling, allowing us to determine the extent to which these purported skills are valued in the labor market. The combined evidence suggests that while human capital accumulation may contribute to the returns to an MBA, the majority of the returns is derived from the signaling/screening function of the degree.

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File URL: http://www.sciencedirect.com/science/article/pii/S0272775711001804
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Bibliographic Info

Article provided by Elsevier in its journal Economics of Education Review.

Volume (Year): 31 (2012)
Issue (Month): 4 ()
Pages: 442-451

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Handle: RePEc:eee:ecoedu:v:31:y:2012:i:4:p:442-451

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Web page: http://www.elsevier.com/locate/econedurev

Related research

Keywords: Returns to education; Signaling;

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Cited by:
  1. MORIKAWA Masayuki, 2013. "Postgraduate Education, Labor Participation, and Wages: An empirical analysis using micro data from Japan," Discussion papers 13065, Research Institute of Economy, Trade and Industry (RIETI).
  2. Oppedisano, Veruska, 2014. "Higher education expansion and unskilled labour market outcomes," Economics of Education Review, Elsevier, vol. 40(C), pages 205-220.
  3. Caroline Elliott & Kwok Tong Soo, 2012. "The Returns to an MBA Degree: The Impact of Programme Attributes," Working Papers 24284646, Lancaster University Management School, Economics Department.

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