In our paper, we view academia from a personnel economics perspective and analyze three important questions: (1) Who decides to become a researcher and what are the mechanisms of selection and self--‐selection that drive this process? (2) What makes re-searchers stay motivated and how can they be incentivized? (3) What other factors, aside from incentives, determine a researcher’s productivity? In our selective review of the literature, we show how personnel economics has contributed and may further con-tribute to an enhanced understanding of the functioning of the academic system. First, however, we elaborate on a researcher’s outcome dimensions, why these need to be measured by adequate output indicators and why differing inputs have to be taken into account. Here, too, personnel economics may contribute since it highlights the virtues and potential pitfalls associated with the identification of relevant outcome dimensions and potential measurement problems, and since it provides us with the necessary tools to assess productivity.