infonet-economy

The theoretical idea of personnel economics is to apply simple economic principles to
the field of human resources management. Personnel economics as a research field
has grown rapidly since the first text book on “Personnel Economics” was published
in 1998. The development is driven by new theoretical insights based on institutional
and behavioural economics and new empirical methods and data sets. Those new
theoretical insights are very fruitful to analyze reasons and consequences of various
human resource management practices, to understand what actually drives and motivates
employees, and what causes organisations to be successful or to fail. With the
new data sets and econometric methods the theories that have been laid out in personnel
economics either many years ago or very recently can now be tested thoroughly.
And the evidence produced by the new data and methods is strongly supportive,
which is not only reassuring for researchers, but it also suggests that practitioners
can actually rely on the ideas because they are born out in the data. So, personnel economics
is not only a vivid research field, but also of great value for human resource
managers, particularly for those taking strategic HR decisions. The fruitfulness of personnel
economics is demonstrated with four examples: training strategies of companies,
recruiting in tight labour markets, career incentives, team size and effort, and entrepreneurial
signalling towards employees and creditors.