The effect of ethics on labor market success: Evidence from MBAs

This paper empirically investigates the link between ethics, earnings and gender. Using a self-reported measure from a longitudinal survey of registrants for the Graduate Management Admission Test, we find that ethical character is negatively associated with males’ wages. For females, however, this relationship does not hold. In addition, using measures of the degree to which ethics is emphasized in business school curricula as an indicator for enhancement of individual ethical standards of graduates, we investigate variation in the returns to an MBA degree. We find that the larger the degree to which males report that business education enhanced their ethical character, the lower their wages, holding other aspects of their education constant. For females, however, enhanced ethics through business school is positively and significantly associated with returns to the MBA degree. More objective measures of ethics emphasis in business school curricula provide further support of these findings.

► We investigate the effect of self-reported ethical character on earnings in the labor market for men and women, observing a negative effect of ethics on earnings for men and no effect for women.
► The degree to which an MBA program enhances the ethical character of graduates influences the estimated returns to the degree, and does so differently across genders.
► Men who attend MBA programs that emphasize ethics receive lower returns to the degree, whereas the opposite effect is found for women.