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2022/2023  KAN-CCMVV5038U  Personnel Economics for Managers

English Title
Personnel Economics for Managers

Course information

Language English
Course ECTS 7.5 ECTS
Type Elective
Level Full Degree Master
Duration One Quarter
Start time of the course First Quarter, Third Quarter
Timetable Course schedule will be posted at calendar.cbs.dk
Max. participants 80
Study board
Study Board for MSc in Economics and Business Administration
Course coordinator
  • Niels Westergård-Nielsen - Department of Accounting (AA)
Main academic disciplines
  • Corporate governance
  • Human resource management
  • Management
Teaching methods
  • Blended learning
Last updated on 11-02-2022

Relevant links

Learning objectives
Personnel economics provides concepts and tools for managers to deal with personnel and leadership issues. The course will provide a foundation for managers to choose between various performance measurement systems, performance reward systems and other incentive systems in hiring and in investments in human capital. These principles apply to wages and wage structure of all organizations. The course will also provide an understanding of how different types of businesses will call for different types of decision making and how this affects the optimal job design.
The course will give the general management student an understanding of how to include personnel management methods in an overall frame for the development of an organization. Thus, the course is not competing with courses in HR but can stand alone or can be considered as a supplement.
  • The student should be able to analyze effects of different incentive systems
  • The student should be able to analyze turnover patterns and to identify normal and abnormal behaviour
  • The student should be able to understand and apply elements of principal agent theory
  • The student should be able to understand an apply the concepts of human capital and the effects on who is going to pay for on the-job-training
Course prerequisites
HA or equivalent
Personnel Economics for Managers:
Exam ECTS 7,5
Examination form Written sit-in exam on CBS' computers
Individual or group exam Individual exam
Assignment type Written assignment
Duration 4 hours
Grading scale 7-point grading scale
Examiner(s) One internal examiner
Exam period Autumn and Spring
Aids Open book: all written and electronic aids, including internet access
Read more here about which exam aids the students are allowed to bring and will be given access to : Exam aids and IT application package
Make-up exam/re-exam
Same examination form as the ordinary exam
If the number of registered candidates for the make-up examination/re-take examination warrants that it may most appropriately be held as an oral examination, the programme office will inform the students that the make-up examination/re-take examination will be held as an oral examination instead.
Course content, structure and pedagogical approach

Personnel economics applies economics to human resources management issues such as recruitment, compensation, promotions, worker turnover, performance evaluation, selection, and training. Personnel economics has been developed over the last 30 years and is taught at leading business schools (Stanford and Chicago Booth School and many other places) all over the world. Personnel economics provides the CEO with a basic understanding of the effects of incentives under different circumstances. Furthermore, Personnel Economics is the foundation for the modern trend of measuring effects of HR policies.

On one side, the course provides a theoretical framework needed to analyse human resources policies under varying institutional and competitive environments. It highlights the importance of information and incentives in the modern economy. On the other side, the course presents empirical evidence and applications based on research on foreign and Danish firms and data. The practical application of the theory is an important aspect of the course.

The following more specific issues are covered in the course: What are the main economic and psychological reasons for turnover of employees? Should pay vary across workers within firms? How are pay and promotions structured across jobs to induce optimal effort from employees? Why do firms use teams and how are they used most effectively? Does CEO pay reflect competitive markets and efficient contracting? How important is discrimination? What makes an entrepreneur? How should human resource management practices be combined within firms?
Thus,  the course will cover issues around pay and investment in human capital seen from the perspective of both workers and employees. The course will also look at turnover of personnel and factors which limit or increase turnover.  Principal-agent theory is used to explain optimal wage packages for different groups of employees and for other management issues. Wages and incentive pay in the form of bonus and shares are central here. Free-rider problems are discussed in the context of organizing work in teams. 
The full list of content of the course:
Lecture 1: Introduction, recruitment and investing in skills.
Lecture 2: Turnover
Lecture 3: Work conditions and turnover
Lecture 4: Decision making in central and decentralized organization.
Lecture 5: Principal Agent model.
Lecture 6: Rewarding Performance.
Lectures 7-9: Career based incentives, options and executive pay.
Lecture 10: Wrap up and group work on selected “hot” topic
Lecture 11: Benefits.
Lecture 12 and 13: Organizational structure, job design and teams
Lecture 14 and 15:  Entrepreneurship and the employment relationship.

Lecture 16: case where several of the topics are applied

Description of the teaching methods
Lectures with group work around specific topics and cases
Feedback during the teaching period
The in class discussions and the group work offers good opportunities for group feed back. Individual feed back is offered in office hours. 2 times during teaching a list is sent out where students can sign up for consultation with the lecturer. Furthermore, students are urged to contact the lecturer via email if they want an individual consultation at other times
Student workload
lectures 33 hours
preparation and exam 173 hours
Expected literature

Edward P. Lazear Michael Gibbs: Personnel Economics in Practice, Any Edition, Wiley
supplemented with articles and cases on the different topics according to the lecture plan

Last updated on 11-02-2022