Is a specialist area of economics that analyses the process and outcomes of personnel management within employing organizations. It is part of the broad field of labour economics but has extended the coverage of the latter from the analysis of labour markets, employment and unemployment, skill formation, and trade unions to encompass management processes within the firm. The interests of personnel economists are very broad, and this is a field that is rapidly developing. Much work, however, is concerned with the impact of different incentive structures and forms of internal labour market on worker behaviour and performance. Bodies of economic theory, such as principal-agent theory and tournament theory, have been developed by personnel economists to analyse these processes. Another developing area is concerned with the links between different personnel/HR strategies and business performance. For example, personnel economists have examined the effects of high performance work practices on the relative performance of business units. Personnel economics has brought the assumptions and methods of conventional economic analysis to the understanding of human resource management. Its practitioners typically develop formal models of worker or company behaviour, express these through mathematical formulae and testable hypotheses, and use econometric analysis of large data-sets to verify or disconfirm their theoretical propositions. The declared intention is to provide a more rigorous, analytical treatment of management than is found in the descriptive research, based on case studies, found within the HRM and industrial relations literature.
Subjects: Human Resource Management.