Arithmetics of research specialization

Abstract

In hiring decisions, universities explicitly reward focusing on a specific field. I model the use of research specialization (focusing) in hiring as a signal of ability. Without explicit reward for focusing, candidates who focus are more likely to be able. However, if job market rewards focusing, less able candidates who would otherwise be indifferent between focusing or not, start focusing, which leads to smaller likelihood of observing an able candidate among those who focus than among those who do not. Specialization works as an effective ability signal only when generation of good ideas is highly likely for all ability levels.