Personnel economics
Encyclopedia
In the 1970s, there was a flurry of research that sought to answer the questions of how prices of goods and services traded within a firm are determined. Many questions about how wages are determined inside a firm, and how the wages of the workers relate to one another within a firm, was raised as a result. Personnel economics was therefore developed to answer some of the questions raised. It is now a field where people examine the pay structure and promotions within hierarchical organization
s.
The major theories were developed in the late 1970s and 1980s by Edward Lazear
, Sherwin Rosen
, Bengt Holmstrom, to name but a few.
In the late 1980s and 1990s, this field had forged some very close links with experimental economics
. The researchers had to generate their own data with experiments because they had found it very hard to find data collected in the real world to test the theories in this field (e.g. tournament theory). Other empirical studies conducted then utilised data from sports tournaments (e.g. golf tournaments) and company records on their suppliers' performances (e.g. raising broiler chickens).
Starting from the mid-1990s, there was a surge of empirical research in this field, caused by the wider availability of personnel records of large companies being made available to researchers.
Personnel economics has its own classification code, JEL: M5, within the Journal of Economic Literature
classification system of the American Economic Association
. While there is a good deal of overlap between personnel economics and traditional labor economics, there are a few key distinctions: studies in personnel economics deal with the personnel management of firms while those in labor economics also emphasize labor markets. In addition, personnel economics deals with issues related to both managerial-supervisory and non-supervisory workers. In this way, personnel economics also deals with some of the same issues as human resource management
.
Hierarchical organization
A hierarchical organization is an organizational structure where every entity in the organization, except one, is subordinate to a single other entity. This arrangement is a form of a hierarchy. In an organization, the hierarchy usually consists of a singular/group of power at the top with...
s.
The major theories were developed in the late 1970s and 1980s by Edward Lazear
Edward Lazear
Edward Paul "Ed" Lazear is an award-winning American economist, considered the founder of personnel economics, and was the chief economic advisor to President George W. Bush.-Career:...
, Sherwin Rosen
Sherwin Rosen
Sherwin Rosen was an American labor economist. He had ties with many American universities and academic institutions including the University of Chicago, the University of Rochester, Stanford University and its Hoover Institution. At the time of his death, Rosen was Edwin A. and Betty L...
, Bengt Holmstrom, to name but a few.
In the late 1980s and 1990s, this field had forged some very close links with experimental economics
Experimental economics
Experimental economics is the application of experimental methods to study economic questions. Data collected in experiments are used to estimate effect size, test the validity of economic theories, and illuminate market mechanisms. Economic experiments usually use cash to motivate subjects, in...
. The researchers had to generate their own data with experiments because they had found it very hard to find data collected in the real world to test the theories in this field (e.g. tournament theory). Other empirical studies conducted then utilised data from sports tournaments (e.g. golf tournaments) and company records on their suppliers' performances (e.g. raising broiler chickens).
Starting from the mid-1990s, there was a surge of empirical research in this field, caused by the wider availability of personnel records of large companies being made available to researchers.
Personnel economics has its own classification code, JEL: M5, within the Journal of Economic Literature
Journal of Economic Literature
The Journal of Economic Literature is a peer-reviewed academic journal on economy published by the American Economic Association. It was established in 1963 as the Journal of Economic Abstracts. As a review journal, it mainly features essays and reviews of recent economic theories...
classification system of the American Economic Association
American Economic Association
The American Economic Association, or AEA, is a learned society in the field of economics, headquartered in Nashville, Tennessee. It publishes one of the most prestigious academic journals in economics: the American Economic Review...
. While there is a good deal of overlap between personnel economics and traditional labor economics, there are a few key distinctions: studies in personnel economics deal with the personnel management of firms while those in labor economics also emphasize labor markets. In addition, personnel economics deals with issues related to both managerial-supervisory and non-supervisory workers. In this way, personnel economics also deals with some of the same issues as human resource management
Human resource management
Human Resource Management is the management of an organization's employees. While human resource management is sometimes referred to as a "soft" management skill, effective practice within an organization requires a strategic focus to ensure that people resources can facilitate the achievement of...
.