MBAs and wage stagnation

Going to business school makes you a dick.

Before the Great Resignation, there was the Great Stagnation, a 40-year relentless decline in workers’ compensation, no matter whether the economy was booming or busting. This was a sharp change from the historical norm in which rising profitability translated to rising wages.

There are lots of explanations for wage stagnation. The most obvious one is the decline of unions, which is the result of changes to labor law that makes it much harder to form a union, win a contract, and enforce that contract (this, in turn, is largely the fault of the Democrats’ abandonment of labor causes in a bid to appeal to the professional and managerial class, which created a bipartisan, anti-union coalition).

But in “Eclipse of Rent-Sharing: The Effects of Managers’ Business Education on Wages and Labor Share in the US and Denmark,” a March 2022 National Bureau for Economic Research paper, Daron Acemoglu (MIT econ), Alex He (U Maryland business), and Daniel le Maire (U Copenhagen econ), we get a more complex explanation:

https://www.nber.org/system/files/working_papers/w29874/w29874.pdf

The paper makes a somewhat nuanced and technically complex argument, but let me paraphrase its conclusion: Going to business-school makes you the kind of person…