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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.

Suggested Citation

  • Hussey, Andrew, 2012. "Human capital augmentation versus the signaling value of MBA education," Economics of Education Review, Elsevier, vol. 31(4), pages 442-451.
    • Handle: RePEc:eee:ecoedu:v:31:y:2012:i:4:p:442-451
    DOI: 10.1016/j.econedurev.2011.12.004
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    Cited by:

    1. Fumihiko SUGA, 2017. "The Returns to Postgraduate Education," ESRI Discussion paper series 336, Economic and Social Research Institute (ESRI).
    2. Jacek Liwiński, 2017. "Premia płacowa z kształcenia na studiach podyplomowych," Gospodarka Narodowa. The Polish Journal of Economics, Warsaw School of Economics, issue 5, pages 105-127.
    3. Matthew Calver, 2015. "Closing the Aboriginal Education Gap in Canada: Assessing Progress and Estimating the Economic Benefits," CSLS Research Reports 2015-03, Centre for the Study of Living Standards.
    4. Calero, Carla & Gonzalez Diez, Veronica & Soares, Yuri S.D. & Kluve, Jochen & Corseuil, Carlos Henrique, 2017. "Can arts-based interventions enhance labor market outcomes among youth? Evidence from a randomized trial in Rio de Janeiro," Labour Economics, Elsevier, vol. 45(C), pages 131-142.
    5. 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.
    6. Gaulke, Amanda & Cassidy, Hugh & Namingit, Sheryll, 2019. "The effect of post-baccalaureate business certificates on job search: Results from a correspondence study," Labour Economics, Elsevier, vol. 61(C).
    7. Oppedisano, Veruska, 2014. "Higher education expansion and unskilled labour market outcomes," Economics of Education Review, Elsevier, vol. 40(C), pages 205-220.
    8. Valerie Bostwick, 2016. "Signaling In Higher Education: The Effect Of Access To Elite Colleges On Choice Of Major," Economic Inquiry, Western Economic Association International, vol. 54(3), pages 1383-1401, July.
    9. Nick Huntington-Klein, 2021. "Human capital versus signaling is empirically unresolvable," Empirical Economics, Springer, vol. 60(5), pages 2499-2531, May.
    10. Jacqueline E McLaughlin & Lana M Minshew & Daniel Gonzalez & Kelsey Lamb & Nicholas J Klus & Jeffrey Aubé & Wendy Cox & Kim L R Brouwer, 2019. "Can they imagine the future? A qualitative study exploring the skills employers seek in pharmaceutical sciences doctoral graduates," PLOS ONE, Public Library of Science, vol. 14(9), pages 1-12, September.
    11. Masayuki Morikawa, 2015. "Postgraduate Education and Labor Market Outcomes: An Empirical Analysis Using Micro Data from Japan," Industrial Relations: A Journal of Economy and Society, Wiley Blackwell, vol. 54(3), pages 499-520, July.
    12. Susan Athey & Emil Palikot, 2024. "The value of non-traditional credentials in the labor market," Papers 2405.00247, arXiv.org.
    13. 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).
    14. Megan Way & Yunwei Gai & Lidija Polutnik, 2016. "Compensation and Employment Impact of a Full-time MBA Program," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 22(1), pages 49-63, February.
    15. Wei-Bin ZHANG, 2014. "Human Capital, Wealth, and Renewable Resources," Expert Journal of Economics, Sprint Investify, vol. 2(1), pages 1-20.
    16. Wei-Bin Zhang, 2018. "Dynamic Interactions Between Health, Human Capital and Wealth," Academicus International Scientific Journal, Entrepreneurship Training Center Albania, issue 17, pages 122-145, March.
    17. Fumihiko Suga, 2020. "The returns to postgraduate education in Japan," The Japanese Economic Review, Springer, vol. 71(4), pages 571-596, October.
    18. Matthew Calver, 2015. "Closing the Aboriginal Education Gap in Canada: The Impact on Employment, GDP, and Labour Productivity," International Productivity Monitor, Centre for the Study of Living Standards, vol. 28, pages 27-46, Spring.
    19. Gregory Gilpin & Michael Kofoed, 2020. "Employer-Sponsored Education Assistance and Graduate Program Choice, Cost, and Finance," Research in Higher Education, Springer;Association for Institutional Research, vol. 61(4), pages 431-458, June.
    20. Naven, Matthew & Whalen, Daniel, 2022. "The signaling value of university rankings: Evidence from top 14 law schools," Economics of Education Review, Elsevier, vol. 89(C).
    21. Zhang Wei-Bin, 2012. "Education and Human Capital Accumulation in a Two -Sector Growth Model with Elastic Labor Supply," Scientific Annals of Economics and Business, Sciendo, vol. 59(1), pages 289-309, July.

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    More about this item

    Keywords

    Returns to education; Signaling;

    JEL classification:

    • I21 - Health, Education, and Welfare - - Education - - - Analysis of Education
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

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