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Does a master’s degree at BI generate added value for a bachelor’s graduate?

Htet, Thiha Thu Hein; Eide, Kristoffer
Master thesis
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URI
https://hdl.handle.net/11250/2789386
Date
2021
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  • Master of Science [1117]
Abstract
The aim of our master thesis is to investigate whether taking a master’s degree at

BI Norwegian Business School generates added value in terms of lifetime salary

earnings for a bachelor graduate. In addition, we plan to interpret and examine the

main contributing factors that give the student the added value from attending the

master’s degree at BI.

By performing an empirical study and creating our own tailor-made NPV model

that is well-suited to a BI student, we found out that attending a master’s degree

contributes to an added value by generating a positive NPV of NOK 3.5 million.

We also analyze the importance of the key variables contributing to the added

value by formulating a regression model to study the impact of different factors

on educational returns (i.e. salary). Consequently, we found out that ‘Master

program’, ‘Age’, ‘Male’, ‘Grade’, ‘EFCAB’ and ‘TESLO’ are the most

significant variables that explain the added value to the starting salary of BI

graduates.

Simultaneously, we acknowledge that there is a concern of endogeneity in our

analyses and that this could lead to a bias in our results, meaning that the key

dependent variable ‘salary’ and the independent variable “Master program” could

be influenced by other unobservable endogenous variables such as human capital.

This could impact not only the student’s decision whether he/she should attend a

master’s program, but also impact his/her starting salary at a later stage. Despite

this concern, we believe our findings and results give valuable insights into the

valuation of a master’s degree.

In conclusion, our thesis suggests that pursuing a master’s degree at BI is a

profitable and worthy long-term investment for students and therefore, we

recommend that bachelor students should invest their time and effort in a 2-year

master’s program for lifetime value creation.
Description
Masteroppgave(MSc) in Master of Science in Business, Finance - Handelshøyskolen BI, 2021
Publisher
Handelshøyskolen BI

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