Personnel Economics

STR435 Personnel Economics

Høst 2022

Vår 2023
  • Topics

    Personnel Economics teaches students about how firms manage their employees. On one hand, in most organizations, a large part of all costs are human resource related. On the other hand, the performance of organizations and firms is the sum of the motivations, decisions, and actions of the employees.

    Evidence shows that management practices play a significant role in explaining differences in firm performance. Evidence also shows that management practices vary considerably across firms, even within the same industry and country. This suggests that there may be significant scope for improvement in management practices across a wide range of firms, and that such improvements may raise firm performance. This course in Personnel Economics examines a large set of management practices that are crucial for firm performance, such as the extent to which a firm hires and retains the high-quality employees, how incentives can be used to affect the performance of workers, and how bonuses can be used to reward effort and raise production.

    The course will focus on conventional economic theories with heavy emphasize on empirical applications.

    The course will study firm policies related to the following topics:

    • Recruitment
    • Motivation and effort
    • Incentive schemes
    • Performance evaluations
    • Training and human capital investments
    • Executive pay
    • Promotions and career-based incentives
    • Organizational structure, job design, teams
    • Fringe benefits

    The course will give the student an understanding of how personnel policies can be applied at a broad level, and is not overlapping or competing with other courses in HR. It can be taken alone, or as a supplement to other HR courses.

  • Learning outcome

    Personnel economics applies economic tools to topics from human resource management. It applies insights from a number of economics fields, such as labor-, behavioral-, and experimental economics, combined with a number of non-economic fields, such as psychology, sociology and organizational theory. In personnel economics, thus, theories and research from these fields are framed to study how firms can implement effective personnel policies that are profitable both for the worker and the firm.


    By the end of the course, the students will have:

    • Gained an advanced understanding of how theory can be used to analyze questions related to human resource management, such as recruiting and hiring, investment in training and payment schemes.
    • Gained an understanding of how personnel policies can be analyzed empirically.
    • Gained an understanding of personnel policies in the Norwegian labor market


    By the end of the course, the students will be able to

    • Apply theory to real world cases
    • Read research papers in the field

    General competence

    By the end of the course, the students will be able to

    • Recognize and analyse personnel policies, and evaluate their appropriateness depending on the context they are used in.

  • Teaching

    Lectures and student presentations.

    Lectures will be held in person, but will be filmed. We will switch entirely to Zoom if Covid-19 regulations restrict teaching to be digital only. We will also consider to add a digital option if it turns out that many students are prevented from attending in person.

  • Compulsory Activity

    A group based term paper on a given topic in Personnel Economics based on current events, max three students per group.

  • Assessment

    A four-hour home exam.

  • Grading Scale


  • Literature

    The main text book:

    Edward P. Lazear og Michael Gibbs (2014): Personnel Economics in Practice, John Wiley & Sons. Students can also use 2nd edition of the book, from 2009.

    This will be supplemented with a list of academic, popular science, and case study articles, announced at the start of the course.



Spring. Offered spring 2022.

Course responsible

Sissel Jensen, Professor, Department of Economics (main course responsible)

Astrid Oline Ervik, Researcher, Centre for Applied Research at NHH