What Factors Determine Academic Success? The Impact of Information Frictions

This paper studies how negative effects of information frictions are mitigated on the academic labor market. Factors important for success in academia are identified through building several models forecasting placement and success in terms of publications. The source of data is the application packages of candidates for academic positions in the International College of Economics and Finance. It is shown that the set of significant factors depends on the success criterion. In particular, initial placement is hugely influenced by the prestige of the PhD granting university, whereas the number of times papers were cited in the past is crucial for the number of future citations. At the same time, length and sentiment of recommendation letters are important regardless of the dependent variable. The paper demonstrates that these letters play the role of a reliable signal of ability, which is recognized by the hiring committees, so recommendations are an effective instrument of reducing information asymmetry.