Personnel Economics

Course overview

Employment and management of human resources are certainly an economic affair, both for employers and employees. Personnel economics is the use of economics tool to explore and address human resources management policies. After all, people are working for a significant part for the economic rewards (which are broader than simply wages) they are earning; understanding these rewards and their mechanisms could then help managers to design and implement better policies. From hiring to incentivizing and empowering, economics reveals itself to be a powerful tool and provides fruitful insights for managers.

The purpose of this course will be not only to provide students with the basic tools of personnel economics but also to assess the strengths and weaknesses of this approach for designing policies. Human resource management is more an art than a science and it requires more than theoretical tools for a manager to be efficient on his or her job.

Textbooks

Lazear, Edward P. (1998): Personnel Economics for Managers. New York: Wiley

Tentative schedule

Lecture 1. Neoclassical economics’ approach of the job market

Reading assignment: Mankiw, Gregory (2015): Principles of Microeconomics. New York: Cengage Learning. Chapters 18 & 19

Lecture 2. Hiring and information asymmetries (I)

Reading assignment: Spence, M, 1973. “Job Market Signaling”, The Quarterly Journal of Economics, 87(3): 355-374

Lecture 3. Hiring and information asymmetries (II)

Reading assignment: Fama, E., 1980. “Agency Problems and the Theory of the Firm,'' Journal of Political Economy, 88(2): 288-307.

Lecture 4. Human capital and training

Reading assignment: Becker, G., 1962. “Investment in Human Capital: A Theoretical Analysis,” Journal of Political Economy, 70(5): 9-49.

Lecture 5. Paying for performance

Reading assignment: Prendergast, C., 1999. “The Provision of Incentives in Firms,” Journal of Economic Literature, 37(1): 7-63.

Lecture 6. Seniority base schemes and promotion

Reading assignment: Chan, W., 1996. “External Recruitment versus Internal Promotion,” Journal of Labor Economics, 14(4): 555-570.

Lecture 7. Incentivizing a team

Reading assignment: Kandel, E, and Lazear, E, “Peer Pressure and Partnerships”, Journal of Political Economy, 100(4): 801-817

Lecture 8. Thinking about benefits

Reading assignment: Brown, C, “Equalizing Differences in the Labor Market”, Quarterly Journal of Economics, 94: 113-134

Lecture 9. Employment as a social relation

Reading assignment: Gouldner, A, “The Norm of Reciprocity: A preliminary Statement”, American Sociological Review, 25: 161-178

Lecture 10. Evaluation of performance and empowerment

Reading assignment: Gellerman, S, and Hodgson, W, “Cyanamid’s New Take on Performance Appraisal”, Harbard Business Review, 66: 36-41