Aug 28, 2008

MBAs and the business cycle

An MBA programme is a special type of animal in the jungle of post-graduate education. The typical student of an MBA programme is somebody with some working experience who drops out of the labour market for a couple of years, in order to get a hopefully better paid job later in his career. If in the same company or somewhere else often depends on circumstances.

When I have asked MBA students the question "Why did you do that?" the typical answers were:
  1. "Because I am paid to do it";
  2. "Because I want to start my own business";
  3. "Because I was working too much, I needed a break";

Here is a chart taken from our favourite magazine which somehow gives a more economically sound argument.

The chart says that attending an MBA is more likely in times of economic downturns. Why? As the wage rate falls on the labour market, the opportunity cost of attending a post-graduate programme falls too. Thus, people hedge their loss in pecuniary assets investing in human capital. Here is the link to the original article.

By the way, if you want to know what they teach you at MBAs, I found this interesting book, reviewed always on our favourite magazine, which I have just ordered.

1 comment:

cosimo said...

NO. I won't comment on MBA's. NO. NOOOOO!!!!!