NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Why Stars Matter

Ajay K. Agrawal, John McHale, Alex Oettl

NBER Working Paper No. 20012
Issued in March 2014
NBER Program(s):   LS   PR

The growing peer effects literature pays particular attention to the role of stars. We decompose the causal effect of hiring a star in terms of the productivity impact on: 1) co-located incumbents and 2) new recruits. Using longitudinal university department-level data we report that hiring a star does not increase overall incumbent productivity, although this aggregate effect hides offsetting effects on related (positive) versus unrelated (negative) colleagues. However, the primary impact comes from an increase in the average quality of subsequent recruits. This is most pronounced at mid-ranked institutions, suggesting implications for the socially optimal spatial organization of talent.

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Document Object Identifier (DOI): 10.3386/w20012

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