A New Study Says You Might Be Earning Less Money If Your Boss Has An MBA

You put a lot of thought into your own professional degree when you're entering the workforce or looking for new employment. There's a popular notion that a degree from a high-ranked college or university will help you get a better job and impress more people with your resume. You probably think your education determines a multitude of factors, including your salary. But a recent study from the National Bureau of Economic Research shows that your boss's degree might have a significant impact on how much you're getting paid.

Having a Boss with an MBA Could Mean You're Making Less Money

Executives who have a business degree such as an MBA tend not to usher in an increase in profits or sales, according to a recently released paper, which was compiled by economists Daron Acemoglu, Daniel le Maire, and Alex He. These MBA executives are more likely to be put in charge of declining pay at their company, but when they fail to increase profits or sales that means you, as their employee, could receive less pay.

Companies that hired managers with an MBA saw wages drop by 6% within five years of working at the business. Meanwhile, the labor share of profits fell 5 percentage points as well. This is happening internationally too. Wages in Denmark declined 3% when managers with business qualifications were running things. It's suggested that this is directly correlated with the school they went to and the education they received.

"Business managers are not more productive."

"We estimate that most of the wage and labor share results we present can be explained as the treatment effect of business education rather than a selection effect," the researchers said.

“Exploiting exogenous export demand shocks, we show that non-business managers share profits with their workers, whereas business managers do not," the paper said. "But consistent with our first set of results, these business managers show no greater ability to increase sales or profits in response to exporting opportunities.”  

It's safe to say that a business degree doesn't automatically make you a good manager. "Our evidence suggests that business managers are not more productive. Firms appointing business managers are not on differential trends and do not enjoy higher sales, productivity, investment, or employment growth following their accession," the paper read.

Next time you're looking for a job, it might be a good idea to ask what your manager's education is.