Returns to MBA quality: Pecuniary and non-pecuniary returns to peers, faculty, and institution quality
A large literature has focused on estimating the returns to schooling and has typically done so by incorporating institutional heterogeneity in quality along merely one dimension (such as average SAT scores). Using longitudinal survey data of registrants for the GMAT exam and school level information from other sources, we create, in the context of graduate management education, multiple indices of school quality, and estimate the effect of these quality measures on multiple indicators of career success. In particular, we create quality measures of MBA programs based on: (1) institutional and curricular factors, (2) characteristics of the student body, and (3) characteristics of the faculty. We create aggregate quality indices by combining individual proxies using factor analysis. We also extend the literature by considering the effects of quality on both earnings and non-monetary outcomes, namely attainment of managerial goals relative to initial individual expectations, self-assessed skill gains, and various measures of job satisfaction. We include several unique individual control variables, and further control for unobserved heterogeneity through the use of instrumental variables and individual fixed effects. Results indicate that the quality of peers and schools may matter most for earnings. When individual fixed effects are included, estimates of quality premiums diminish somewhat, though the estimated premium associated with school quality increases, emphasizing the importance of controlling for selection into programs of varying quality. School quality is also an important predictor of several non-pecuniary outcomes.
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Black, Dan A. & Smith, J.A.Jeffrey A., 2004.
"How robust is the evidence on the effects of college quality? Evidence from matching,"
Journal of Econometrics,
Elsevier, vol. 121(1-2), pages 99-124.
- Dan A. Black & Jeffrey Smith, 2003. "How Robust is the Evidence on the Effects of College Quality? Evidence From Matching," University of Western Ontario, Centre for Human Capital and Productivity (CHCP) Working Papers 20033, University of Western Ontario, Centre for Human Capital and Productivity (CHCP).
- Heckman, James, 2013.
"Sample selection bias as a specification error,"
Publishing House "SINERGIA PRESS", vol. 31(3), pages 129-137.
- Griliches, Zvi, 1986. "Economic data issues," Handbook of Econometrics, in: Z. Griliches† & M. D. Intriligator (ed.), Handbook of Econometrics, edition 1, volume 3, chapter 25, pages 1465-1514 Elsevier.
- Colbert, Amy & Levary, Reuven R. & Shaner, Michael C., 2000. "Determining the relative efficiency of MBA programs using DEA," European Journal of Operational Research, Elsevier, vol. 125(3), pages 656-669, September.
- Grogger, Jeff, 1996. "Does School Quality Explain the Recent Black/White Wage Trend?," Journal of Labor Economics, University of Chicago Press, vol. 14(2), pages 231-53, April.
- Boudarbat, Brahim, 2008. "Field of study choice by community college students in Canada," Economics of Education Review, Elsevier, vol. 27(1), pages 79-93, February.
- Wayne A. Grove & Andrew Hussey, 2011. "Returns To Field Of Study Versus School Quality: Mba Selection On Observed And Unobserved Heterogeneity," Economic Inquiry, Western Economic Association International, vol. 49(3), pages 730-749, 07.
- Dan A. Black & Jeffrey A. Smith, 2006. "Estimating the Returns to College Quality with Multiple Proxies for Quality," Journal of Labor Economics, University of Chicago Press, vol. 24(3), pages 701-728, July.
- Tracy, Joseph & Waldfogel, Joel, 1997.
"The Best Business Schools: A Market-Based Approach,"
The Journal of Business,
University of Chicago Press, vol. 70(1), pages 1-31, January.
- Joseph Tracy & Joel Waldfogel, 1994. "The Best Business Schools: A Market Based Approach," NBER Working Papers 4609, National Bureau of Economic Research, Inc.
- Eric A. Hanushek & John F. Kain & Steven G. Rivkin, 1998.
"Teachers, Schools, and Academic Achievement,"
NBER Working Papers
6691, National Bureau of Economic Research, Inc.
- Peter Arcidiacono & Jane Cooley & Andrew Hussey, 2008. "The Economic Returns To An Mba," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 49(3), pages 873-899, 08.
- Monks, James, 2000. "The returns to individual and college characteristics: Evidence from the National Longitudinal Survey of Youth," Economics of Education Review, Elsevier, vol. 19(3), pages 279-289, June.
- Jeff Grogger & Eric Eide, 1995. "Changes in College Skills and the Rise in the College Wage Premium," Journal of Human Resources, University of Wisconsin Press, vol. 30(2), pages 280-310.
- Arcidiacono, Peter, 2004.
"Ability sorting and the returns to college major,"
Journal of Econometrics,
Elsevier, vol. 121(1-2), pages 343-375.
- Dan A. Black & Seth Sanders & Lowell Taylor, 2003. "The Economic Reward for Studying Economics," Economic Inquiry, Western Economic Association International, vol. 41(3), pages 365-377, July.
- James, Estelle, et al, 1989. "College Quality and Future Earnings: Where Should You Send Your Child to College?," American Economic Review, American Economic Association, vol. 79(2), pages 247-52, May.
- Willis, Robert J & Rosen, Sherwin, 1979.
"Education and Self-Selection,"
Journal of Political Economy,
University of Chicago Press, vol. 87(5), pages S7-36, October.
- Behrman, Jere R & Taubman, Paul, 1989. "Is Schooling "Mostly in the Genes"? Nature-N urture Decomposition Using Data on Relatives," Journal of Political Economy, University of Chicago Press, vol. 97(6), pages 1425-46, December.
- Joshua D. Angrist & Alan B. Keueger, 1991.
"Does Compulsory School Attendance Affect Schooling and Earnings?,"
The Quarterly Journal of Economics,
Oxford University Press, vol. 106(4), pages 979-1014.
- Joshua D. Angrist & Alan B. Krueger, 1990. "Does Compulsory School Attendance Affect Schooling and Earnings?," NBER Working Papers 3572, National Bureau of Economic Research, Inc.
- Behrman, Jere R & Rosenzweig, Mark R & Taubman, Paul, 1994. "Endowments and the Allocation of Schooling in the Family and in the Marriage Market: The Twins Experiment," Journal of Political Economy, University of Chicago Press, vol. 102(6), pages 1131-74, December.
- Lena Lindahl & Hakan Regnér, 2005.
"College Choice and Subsequent Earnings: Results Using Swedish Sibling Data,"
Scandinavian Journal of Economics,
Wiley Blackwell, vol. 107(3), pages 437-457, 09.
- Lindahl, Lena & Regnér, Håkan, 2003. "College choice and subsequent earnings. Results using Swedish sibling data," Working Paper Series 4/2003, Swedish Institute for Social Research.
- Behrman, Jere R & Rosenzweig, Mark R & Taubman, Paul, 1996. "College Choice and Wages: Estimates Using Data on Female Twins," The Review of Economics and Statistics, MIT Press, vol. 78(4), pages 672-85, November.
- Orley Ashenfelter & Cecilia Rouse, 1997.
"Income, Schooling, and Ability: Evidence from a New Sample of Identical Twins,"
NBER Working Papers
6106, National Bureau of Economic Research, Inc.
- Orley Ashenfelter & Cecilia Rouse, 1998. "Income, Schooling, and Ability: Evidence from a New Sample of Identical Twins," The Quarterly Journal of Economics, Oxford University Press, vol. 113(1), pages 253-284.
- Montgomery, Mark, 2002. "A nested logit model of the choice of a graduate business school," Economics of Education Review, Elsevier, vol. 21(5), pages 471-480, October.
- Dominic J. Brewer & Eric R. Eide & Ronald G. Ehrenberg, 1999. "Does It Pay to Attend an Elite Private College? Cross-Cohort Evidence on the Effects of College Type on Earnings," Journal of Human Resources, University of Wisconsin Press, vol. 34(1), pages 104-123.
- Dichev, Ilia D, 1999. "How Good Are Business School Rankings?," The Journal of Business, University of Chicago Press, vol. 72(2), pages 201-13, April.
- Betts, Julian R, 1995. "Does School Quality Matter? Evidence from the National Longitudinal Survey of Youth," The Review of Economics and Statistics, MIT Press, vol. 77(2), pages 231-50, May.
- Kane, Thomas J & Rouse, Cecilia Elena, 1995. "Labor-Market Returns to Two- and Four-Year College," American Economic Review, American Economic Association, vol. 85(3), pages 600-614, June.
- Paglin, Morton & Rufolo, Anthony M, 1990. "Heterogeneous Human Capital, Occupational Choice, and Male-Female Earnings Differences," Journal of Labor Economics, University of Chicago Press, vol. 8(1), pages 123-44, January.
When requesting a correction, please mention this item's handle: RePEc:eee:labeco:v:26:y:2014:i:c:p:43-54. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Zhang, Lei)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.