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MBA News: MBA Facilitates Improbable Income Leap?

According to an article in the New York Times today, Americans are having an increasingly difficult time moving from one quintile of income earners to another (“Harder for Americans to Rise From Lower Rungs”).  Maybe the enduring popularity of the MBA can be explained by the fact that the average MBA from a top school makes the leap from the second highest quintile to the highest quintile in two years (or less). Take the average Kellogg student, for example, who made roughly $72,000 going into the program, meaning that this person was already in the top 25% of earners. Upon graduation, if this average student earned an average $110,000 salary, he or she would leap into the top 10% overall.

The article explains that mobility and lack of mobility can unsurprisingly be linked to education levels:

“One reason for the mobility gap may be … the unusually large premiums that American employers pay for college degrees. Since children generally follow their parents’ educational trajectory, that premium increases the importance of family background and stymies people with less schooling.”

We never cheerlead for the MBA, but in this case, score a point for those who feel the degree is a worthwhile investment…

 



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