Personnel economics is the application of microeconomic principles to human resources issues that are of concern to most businesses (Lazear, 2000). This field of economics has grown dramatically since its inception (circa 1980). This growth has been fueled by improvements in computer technology: both for firms and researchers. Firms can collect and manage more data than ever before, and researchers are better equipped to analyze this data. Many firms now have data archives spanning several years, complete with every salary increase, bonus payment, training program, promotion, dismissal, reprimand, exit interview, etc. Such data provides an excellent opportunity to understand the incentives within firms.

Our discussion will focus on the key differences between personnel economics and personnel/human resources. We will also argue that HR systems are an excellent place to look for institutions within firms, thus making them suitable for analysis using New Institutional Economics.