Wednesday, December 8, 2010

The location changing paradox: when two MBAs can be too much

Generally speaking, I think most would agree that it is easier for someone with an MBA to change job-location than it is for a non-MBA. However, for an MBA-couple it can be a lot harder to change job-location than it is for a non-MBA couple. This sounds counter intuitive but from my experience this is how it works:

Assuming a couple wants to change location (without a predefined location in mind) they would change it as soon as the first person finds a new job. The second person would follow and try to get a job at a later stage.

Now consider an MBA/non-MBA couple – in this case, it tends work like it does for a single person with an MBA. The rational approach is for the MBA-person to try to find a well paid job in a different location and as soon as he/she finds it, they move to a new location. The non-MBA-person will follow, giving up his/hers job and will try to get a job once they are in the new location. It seems to make sense to have the better-paid person leading the way and the opportunity cost of losing the non-MBA person’s salary might even be partly or fully compensated by an increase in pay of the MBA-person or in the quality of life. I’ve seen this happening many times when the couple just wants to change location or when the MBA person goes for an assignment in a different country with the same company.

But what happens with an MBA-couple? Something a little bit different. In this case, I assume both have a comparable and high salary. Following the same reasoning, they start searching and they plan on moving as soon as the first one finds a job. In a tough economy, chances are one will find it before the other does. Now add that to the fact each individual salary is high, so giving up any of the salaries implies a significant dent in the household income. Even with a pay rise of 20% for one the parties, the household dent will be significant. Depending on the risk aversion profile of the couple (and the job market dynamics of the chosen location), the opportunity cost of moving can easily be too high preventing them from moving, even if both were not fulfilled with their original jobs.

Isn’t it ironic that one MBA could make us perfectly mobile (and I posted about that before here), but if you put two MBAs together it might be the perfect combination for getting stuck in the same place?

PS: I know this is a simplification of the world and I know I’m making a few assumptions regarding differences in MBA/Non MBA salaries that are not always true. The truth is I see this happening more often than not.


Anonymous said...

Your blog is very informative about the Cambridge MBA, but I believe this post to be a little close minded. In a MBA/non MBA couple, just because the MBA gets a new job in a different location does not automatically mean that they will up and move. Every couple is different. What if the non-MBA really enjoys their job and isn't willing to give it up? Money, after all, isn't everything.

Cambridge MBA Blogger said...

I agree with you. But the whole point of the post was about moving to a different place. If you want to move, it can be challenge to find two jobs in the new place where both would be fulfilled and where both could have a salary matching their expectations.

Money isn't everything, but I do feel there are some challenges when moving countries when a couple is formed by two people with an MBA.