What are the employment outcomes for MBAs from institutions with broad access?

Date:

What are the employment outcomes for MBAs from institutions with broad access?

  • News by AUN News correspondent
  • Wednesday, February 08, 2023
  • AUN News – ISSN: 2949-8090

Summary:

  • Compared to White candidates, Black guys received 30% less favourable answers.

  • According to the survey, employers responded positively to candidates with names that suggested they were Black men 30% less frequently than they did to applicants with words that meant they were White (see Figure 2).

  • There are no other candidate variables that could account for the differing response rates by race and gender because all other résumé components were chosen at random.

  • Additionally, broad-access institutions are not the only ones where students have concerns about the cost of master’s degrees and their potential financial benefits.

  • Finally, the findings confirm that racial discrimination exists in the labour market across numerous industries and metropolitan locations.

The number of students enrolling in graduate programmes has increased significantly during the last few decades. Between 2000 and 2018, the proportion of Americans with graduate degrees increased.

Graduate students borrow a disproportionate amount of federal student loans due to the rising costs of attending graduate school and the opportunity to borrow Grad PLUS Loans up to their entire cost of attendance (less any other aid obtained). Just 19% of people who borrowed federal student loans in 2017–18 were graduate students, yet the amount of money they borrowed for graduate school accounted for 40% of all loans made that year.

There are currently around two master’s degrees awarded for every five bachelor’s degrees, with the vast majority of graduate students pursuing master’s degrees. For a master’s degree, borrowers typically borrow more than $55,000, which is about twice as much as they did for a bachelor’s degree. Understanding the labour market benefits of master’s degrees—long hailed as the “new bachelor’s” degree—is crucial given the size and cost of master’s enrolment.

Just 19% of people who took out federal student loans in 2017–18 were graduate students, yet the amount of money they borrowed for graduate school accounted for 40% of all loans made that year.

I recently examined how companies react to job candidates with one of the most well-known master’s degrees: a Master of Business Administration in a paper published in the Journal of Policy Analysis and Management (JPAM) (MBA). One-fourth of all master’s degrees awarded are MBAs.

Utilising a field experiment to ascertain how employers view job applicants with MBAs

I conducted a field experiment to investigate the extent to which employers distinguish between job seekers based on the sort of institution where they got their MBA, building on earlier research at the undergraduate level (or if they did not receive an MBA at all). I did this by making bogus resumes that were made to seem real. I then submitted the resumes to thousands of legitimate job postings and monitored employer replies. I determined how companies react to applicants that differ on those dimensions but are otherwise equal by randomly assigning important information displayed on the résumés.

First, I randomly chose the MBA institution type for each set of four applications submitted for a position. I decided not to concentrate on business programmes at universities like Harvard and the University of Michigan, which frequently garner a disproportionate amount of media attention yet enrol a lesser proportion of MBA candidates. Instead, I decided to identify MBAs from three categories of broad-access universities: for-profit institutions, mainly other online institutions, and regional colleges, which together enrol the vast majority of MBA students. One group (one-fourth of the applications) included the information that the applicant had only received a bachelor’s degree in addition to these three MBA treatment groups. All applicants listed a large, open-access public university in a nearby state as their bachelor’s degree-granting school.

Second, I additionally randomly altered the applicant’s inferred ethnicity and gender in light of enduring evidence of racial employment prejudice. According to the candidates’ names on their applications, they were either Black women, Black men, White women, or White men (for more details on the process used to select these names, see the full paper). All four candidates had names that suggested they were the same race and gender for each job posting.

I applied for 9,480 employment requiring at least a bachelor’s degree in management, marketing, and sales to firms in 16 major U.S. metropolitan areas. The experiment was conducted during the early months of the COVID-19 pandemic, between April 2020 and November 2020. Many candidates would probably anticipate that having an MBA would make them stand out in the job market during this turbulent time, as racial justice issues were gaining much attention.

No better than applicants with merely a bachelor’s degree were MBA holders.

Employers responded favourably to applicants in the three MBA treatment groups (for-profit, online, and regional institutions) at roughly the same rate (i.e., interview callbacks). Additionally, as seen in Figure 1, there were no appreciable differences between the favourable replies for applicants in the MBA treatment groups and those with only a bachelor’s degree. Therefore, despite the enormous time and expense needed for an MBA, the total response rates from companies did not vary across the treatment groups. Even for positions where master’s degree holders were preferred, candidates in the MBA treatment groups did not earn significantly higher favourable response rates than those with only a bachelor’s degree.

figure 1Click the image to view full-size in a new tab.

Compared to White candidates, Black guys received 30% less favourable answers.

According to the survey, employers responded positively to candidates with names that suggested they were Black men 30% less frequently than they did to applicants with words that meant they were White (see Figure 2). There are no other candidate variables that could account for the differing response rates by race and gender because all other résumé components were chosen at random. This finding provides striking evidence of persistent racial discrimination when many businesses publicly expressed a more significant commitment to equity in their employment practises, given that the survey mostly occurred during the so-called racial reckoning of 2020.

figure 2
Click the image to view full-size in a new tab.

IMPLICATIONS

These findings provide several important insights into the contemporary MBA landscape, which is increasingly made up of online programmes and various forms made to accommodate working people.

“First, our results suggest cause for concern for students thinking that an MBA from a broad-access college will greatly enhance their likelihood of receiving favourable responses from a new company.”

First, our data provide cause for concern for students anticipating that an MBA from a broad-access college will significantly increase their likelihood of getting favourable answers from a new company. Of course, many students pursue an MBA for reasons other than those considered in this study, such as advancing their career at their current employer. Additionally, broad-access institutions are not the only ones where students have concerns about the cost of master’s degrees and their potential financial benefits. It’s also crucial to remember that this experiment excluded other master’s degrees and highly selective MBA programmes, for which the results may have differed.

Second, these results highlight the significance of ensuring graduate students can comfortably repay their student loans. To prevent students from being unnecessarily burdened by borrowing for these programmes, institutions and policymakers concerned about rising student debt will need to work hard in the years to come.

Finally, the findings confirm that racial discrimination exists in the labour market across numerous industries and metropolitan locations. The U.S. Equal Employment Opportunity Commission (EEOC) may need extra investigative or enforcement measures to protect against racial discrimination fully. Racial and ethnic hiring equity can only be attained by identifying and resolving the causes of uneven hiring outcomes, such as hiring managers’ judgements of candidates, algorithmic prejudice, information outside the application, and businesses’ recruitment efforts.

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