Recent scholarship on the returns to labor market specialization often claims that being specialized is advantageous for job candidates. We argue, in contrast, that a specialist discount may occur in contexts that share three features: strong institutionalized mechanisms, candidate profiles with direct investments that signal their value, and a high supply of focused candidates relative to demand. We then test whether there is a specialist discount for graduating elite MBAs, as it is a labor market that exemplifies these conditions under which we expect specialists to be penalized. Using rich data on two graduating cohorts from a top-tier U.S. business school, we show that elite MBA graduates who established a focused (specialized) market profile of experiences relating to investment banking before and during the program were less likely to receive multiple job offers and were offered less in starting-bonus compensation than similar MBA candidates with no exposure or less-focused exposure to investment banking. Our theory and findings suggest that the oft-documented specialist advantage may be overstated.
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