People, Practices, and Productivity: A Review of New Advances in Personnel Economics

This chapter surveys recent advances in personnel economics. We begin by presenting evidence showing substantial and persistent productivity variation among workers in the same roles. We discuss new research on incentives and compensation; hiring practices; the influence of managers and peers; and time use, technology, and training. We emphasize two main themes. First, we seek to illustrate the interplay between these topics and productivity differences between people and work units. Second, we argue that personnel economics has benefited from exploration, which we think of as the willingness to use new data and methods to shed light on existing questions and to raise new ones. As many personnel studies use data from individual firms, we discuss external validity and provide concrete guidance on how to improve discussions of the generalizability of findings from specific contexts.