Handbook Chapters

Personnel economics is the application of economic and mathematical approaches to traditional topics in the study of human resource management, including compensation, turnover, and incentives, as well as norms, teamwork, worker empowerment, and peer relationships. Using tools from game theory, information economics, and econometrics, personnel economics has come a long way over the past few decades and now produces a large share of the labor economics literature…

We survey the personnel economics literature, focusing on how firms establish, maintain, and end employment relationships and how firms provide incentives to employees. The literature has been less successful at explaining how firms find the right employees in the first place — we survey work in this area and suggest directions for further research.