Specialists or All-Rounders: How Best to Select University Students?

This paper studies whether universities should select their students only using specialised subject-specific tests or based on a broader set of skills and knowledge. Theoretically, I show that even if broader skills are not improving graduates' outcomes in the labour market, the university optimally chooses to use them as a criterion for selection alongside the mastery of more subject-specific tools. Empirically, I exploit the variation between subject-specific and non-specific entrance exam sets on Portuguese students' large administrative dataset. My central finding is that universities with less specialised admission policies admit a pool of students who obtain a higher final GPA.