By Guido Friebel
A few days ago, we received the sad news that Edward Lazear has passed away. Edward Lazear was a Professor at the Stanford Graduate School of Business and Senior Fellow at the Hoover Institution. From 2006 to 2009 he was Chairman of the Council of Economic Advisors to President George W. Bush. He is considered one of the most important labor economists of our time.
Edward (Eddie) Lazear was the founder of modern personnel economics which brought the firm to the spotlight of labor economics. Grounded in modern micro-economics and embedding organizational policies into labor market settings, his approach has been very influential for many of us at SIOE. His theoretical models strongly influenced theoretical organizational economics, and the empirical methods he developed with co-authors laid the groundwork of many recent empirical studies, for instance, on the role of managers for team productivity, or promotion hierarchies.
While continuing his research agenda on the role of personnel management on the productivity of firms, Eddie reached out to the analysis of education, culture and language, entrepreneurship, peer pressure, and recently, demography. He thus continued the tradition of economists such as Gary Becker and Sherwin Rosen who made use of economic methods for many problems in the social sciences. I recommend reading his paper with Richard Freeman* on works councils, a beautiful example of comparative institutional analysis.
When I began my graduate studies in the early 90's, some of Lazear's contributions, for instance on tournaments, already enjoyed the status of modern classics. Becoming more acquainted with his work over time, I found his contributions most enlightening for a better understanding of the internal logic of organizations, the constraints to firm efficiency and the policies to overcome them. Often, this work had intriguing implications for policy discussions, for instance, his paper with Sherwin Rosen** on gendered wage and promotion differentials.
In the late nineties, I had the pleasure of co-organizing with Eddie a couple of conferences on organizations and human resources in Toulouse and Stockholm. I was impressed by his broad interests in economics, politics and institutions and have continuously benefitted much from his comments and encouragement. Trying to follow Eddie's speed in debates was challenging. I have heard the same from colleagues who played sports with him. In academic discussions, his approach was kind and constructive but sharp and precise.
His work as an institution builder is outstanding. He helped found many institutions and conferences around the globe, established Personnel Economics at NBER, and founded the Journal of Labor Economics. His energy, intellectual curiosity, willingness to debate, and outstanding ability to analyze difficult problems with the greatest clarity will be sorely missed.
Prof. Guido Friebel,
Goethe University Frankfurt
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*Freeman, Richard, and Edward Lazear. "An Economic Analysis of Works Councils." Works Councils: Consultation, Representation, and Cooperation in Industrial Relations [NBER conference volume], Chicago: University of Chicago Press for the NBER. 1995.
**Lazear, Edward P., and Sherwin Rosen. "Male-female wage differentials in job ladders." Journal of Labor Economics 8.1, Part 2 (1990): S106-S123.