Personnel Economics: Past Lessons and Future Directions

Edward P. Lazear

NBER Working Paper No. 6957
Issued in February 1999
NBER Program(s):Labor Studies

In 1987, the Journal of Labor Economics published an issue on the economics of personnel. Since then, personnel economics, defined as the application of labor economics principles to business issues, has become a major part of labor economics, now accounting for a substantial proportion of papers in this and other journals. Much of the work in personnel economics has been theoretical, in large part because the data needed to test these theories has not been available. In recent years, a number of firm-based data sets have surfaced that allow personnel economics to be tested. Using two such data sets, the implications of theories that relate to life-cycle incentives compression, and peer pressure are given support. The conclusion is that personnel economics is real. It is far more than a set of clever theories. It has relevance to the real world. Additionally, firm-based data make asking and answering new kinds of questions feasible. The value of research in this area is high because so little is known as compared with other fields in labor economics. Questions about the importance of a worker's relative position in a firm, about intrafirm mobility, about the effect of the firm's business environment on worker welfare, about the significance of first impressions can be answered using the new data. Finally, it is argued that the importance of personnel economics in undergraduate as well as business school curricula will continue to grow.

download in pdf format
   (1649 K)

email paper

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w6957

Published: JLE, Vol. 17, no. 2 (April 1999): 199-236.

Users who downloaded this paper also downloaded* these:
Lazear w7419 Output-based Pay: Incentives or Sorting?
Lazear and Oyer w13480 Personnel Economics
Lazear and Rosen w0401 Rank-Order Tournaments as Optimum Labor Contracts
Lazear w5672 Performance Pay and Productivity
Lazear and Shaw w13653 Personnel Economics: The Economist's View of Human Resources
NBER Videos

National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email:

Contact Us