Freakonomics Radio

517. Are M.B.A.s to Blame for Wage Stagnation?

14 snips
Oct 6, 2022
Daron Acemoglu, an MIT Institute Professor, discusses how MBA programs shape corporate leadership and contribute to wage stagnation. He reveals troubling trends: bosses educated in business schools tend to pay their workers less, despite rising productivity. The conversation dives into the prioritization of shareholder value over employee welfare and questions the true impact MBA-trained CEOs have on profits and wages. Acemoglu examines the ethical divide in business education and the broader implications for economic inequality.
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INSIGHT

Wage Stagnation Puzzle

  • Wages have grown slower than productivity, puzzling economists.
  • This suggests a decline in rent-sharing between employers and workers.
INSIGHT

Data and Methodology

  • The study used U.S. and Danish firm-level data matched with worker-level information.
  • This approach allowed tracking of individual worker wage changes under different managers.
INSIGHT

Correlation vs. Causality

  • A correlation exists between the rise of MBA CEOs and declining labor share.
  • Acemoglu investigates whether this correlation implies causality.
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