Stanford Professor Wins Labor Economics Prize

Monday, October 18, 2004
STANFORD

The Institute for the Study of Labor (IZA) has named Edward P. Lazear, a senior fellow at the Hoover Institution and a professor at the Stanford University Graduate School of Business, as the winner of its 2004 Prize in Labor Economics. The $62,000 prize will be awarded October 25 in Berlin, Germany.

The IZA Prize, administered by the Institute in Bonn, is one of the largest in economics. "This prestigious award marks the significant contribution Ed Lazear has made by pioneering the field of personnel economics," said Robert L. Joss, dean of the Stanford Graduate School of Business. "It is insightful academic work like this which makes it possible for managers and management to solve complex problems that affect both people and markets."

"I congratulate the Institute for a superb selection of Ed Lazear," said John Raisian, director of the Hoover Institution. "Ed continues as a leader in the broad fields of labor and personnel economics, and the role of government within these disciplines. Ed has accomplished much in his professional life, and promises even more in the coming decades. We are proud to have him as one of our eminent scholars at Stanford and the Hoover Institution."

Lazear has conducted path-breaking research that has expanded the understanding of labor economics. "He used price theory and incentive theory from economics to organize our understanding of how to mobilize human resources and incentives within firms," said economist James Heckman, a University of Chicago Nobel laureate who worked with Lazear when he taught at Chicago. "He single-handedly founded the modern field of personnel economics. He revolutionized the teaching, the practice, and the understanding of personnel economics and the economics of human resources in companies."

Lazear, 56, has written extensively on labor markets, microeconomic theory, and issues involving worker compensation and effects on productivity. He began developing research and ideas that became the seminal work in the field of personnel economics as he expanded his teaching from doctoral students to MBA students in the 1970s and 1980s at the University of Chicago Graduate School of Business. The future managers pressed for real-world applications of the theories and analysis in labor economics. "By being forced to teach this in a business school and by being a very imaginative economist, he could see there was a field here," said Nobel laureate Gary S. Becker, a University of Chicago economist, Hoover Institution fellow, and former colleague of Lazear's at Chicago. "It's marrying labor economics with organizational behavior."

Lazear's work includes studies on employee incentives, such as piece rates, age-earnings profiles, profit-sharing, and career prospects. He has studied hiring and promotion strategies, teamwork, and the organization of work processes. One of his first papers in personnel economics (with economist Sherwin Rosen) pioneered tournament theory, which helps understand promotion and raises within an organization.

He also has written about government policies on discrimination, affirmative action, and comparable worth, and distribution of income within the household. "His work is notable for the depth of the insights, the enormous range, the imagination with which he frames issues and illuminates them, and the sustained productivity over his professional career," said Nobel Prize winner A. Michael Spence, professor emeritus and former dean of the Stanford Business School. "It is wonderful that he is receiving this recognition for his work, particularly creating and establishing the field of personnel economics in both our discipline and in management education."

He is the author of Personnel Economics, published by MIT Press in 1995, and was the founding editor of the Journal of Labor Economics. Lazear is the Jack Steele Parker Professor of Human Resources Management and Economics at Stanford Business School where he has taught since 1992. He is the Morris Arnold Cox Senior Fellow at the Hoover Institution where he has been a senior fellow since 1985. He is also a senior fellow, by courtesy, at the Stanford Institute for Economic Policy Research.

The IZA Prize Committee included Nobel Prize winners George A. Akerlof and Becker, as well as Richard Portes, president of the Centre for Economic Policy Research (CEPR) in London. "Lazear is an exceptionally creative thinker, whose input has profoundly shaped both economic research and policy debates," the Institute's award statement said.

The annual prize was established by IZA with support from Deutsche Post World Net to honor outstanding contributions to the scientific analysis of labor markets and labor policy. Lazear is the third American to win the prize. Previous winners of the award, founded two years ago, were Jacob Mincer and Orley Ashenfelter.

For more information on the work of Ed Lazear, go to: http://gobi.stanford.edu/facultybios/bio.asp?ID=96