MBA Pay Growth: Business schools lagging U.S.

mbapay_630x420 Wage growth in MBA business schools in the U.S. has lagged far behind increases in Europe and Asia, according to a recent study on wage trends adjusted for purchasing power.

Research by professors at the Spanish business school ESADE is based on data published in the Financial Times from 2001 to 2010. Displays graduates Asian business schools MBA pay had increased by 64 percent compared to 35 percent for Europe and 12 percent for the U.S.

The authors, François Collet and Luis Vives, attributed the rise in wages in Europe and the growing presence of non-US schools near the top of international rankings from the Financial Times to the growing demand of MBA in Europe and the proximity European programs geographical core labor markets they serve. The authors focused on the U.S. and Europe and Asian business schools represent only 8 percent of the 147 schools examined.

“Demand for business students grew very strongly in Europe in the late 1980s, and European business schools have a strong connection to local labor markets,” Collet said in an interview. “For European students made more sense to attend a European business school instead of studying in the U.S.”

The study, which has been accepted for publication by the Academy of Management Learning and Education, uses the data to pay the Financial Times that the year is collected before it is published MBAs three years after graduation, and combined with data from two previous years. So the 2010 data used in the study are the promotions of 2004 and 2006, the 2001 data are for promotions from 1995 to 1997.

To avoid distortions between countries, the FT used to pay amounts in “international dollars” (see graphic) that have been adjusted for purchasing power parity, in fact the numbers increase or decrease wage premiums based on the cost of goods that MBA graduates are working.

Teachers discussed a number of other possible causes of the poor performance of U.S. schools in payment, including post-9/11 visa restrictions in the U.S., the financial crisis, growth in the supply of graduates MBA worldwide, the greater likelihood that Asian students will study in Europe Asia after graduation, and the fact that most European programs are shorter and therefore less expensive. None of these changes “may explain the erosion of differences in wage levels and positions in the ranking among MBA graduates of U.S. schools and their counterparts in European schools,” wrote the authors.

What does all this mean for the deans of business schools in the U.S. and Europe? On one hand, the authors write, should start taking Asia seriously, using alliances with business schools there to take advantage of the economic growth of the region and to maintain and improve their situation at home. “If alliances that mattered in the past, to import even more,” says Collet. “It is not about getting a few students in Shanghai.’s A more complicated story.”

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