ECON 4000: The Economics of Human Resources

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1 ECON 4000: The Economics of Human Resources Fall 2009 Caldwell 203 Dr. Myra Moore INSTRUCTOR Dr. Myra Moore, Ph.D., University of Georgia Lecturer, Department of Economics The University of Georgia Terry College of Business Phone: (706) Office: 526 Brooks Hall Office Hours: Mon 12:30-1:30; Tues 11-12; Wed 12:30-1:30 Contact Notes: I encourage you to come see me if you have questions or concerns about the course. If my scheduled office hours are not convenient, please me to schedule an appointment. COURSE DESCRIPTION The application of microeconomic principles to the study of the behavior of individuals and business firms in the labor market. The roles of private institutions and public policies in affecting worker compensation, employment, unemployment, and the distribution of labormarket earnings. MOORE S COURSE DESCRIPTION In ECON 4000 we will apply microeconomic principles to the study of the behavior of individuals and business firms in the labor market. There are three major areas of concern: (1) employee selection, (2) organizational structure and job design, and (3) employee motivation. Within these areas, we will use economic models to address a variety of specific human resource issues, including recruiting employees, training employees, allocating decision-making authority within the firm, and designing performance-based compensation strategies. We will also consider how private institutions and public policies affect firm and employee choices. PRE-REQUISITES ECON 2105 (Macro) and ECON 2106 (Micro) Please note: You must be prepared to use the theories and models covered in these courses. Also, students with credit in Econ 4600/6600 may not receive credit for Econ 4000.

2 COURSE OBJECTIVES After completing this course, you will be able to: 1. Explain the costs and benefits that should be considered in deciding whether or not to hire a particular job candidate. 2. Describe the use of credentials and probation as screening mechanisms for firms. 3. Explain how signaling can separate low-quality applicants from high-quality applicants. 4. Distinguish between general and firm-specific human capital. 5. Evaluate who bears the cost and who receives the benefit of a given human capital investment. 6. Identify the costs and benefits of employee turnover. 7. Explain why most firms have a no matching policy, and why they sometimes ignore their own policy. 8. Describe how firms can structure buyout plans to target certain employees. 9. Compare the costs and benefits of centralized v. decentralized decision-making. 10. Distinguish between specific and general knowledge. 11. Describe the trade-off between false positive and false negative errors, and describe how a firm s organizational structure can minimize a given type of error. 12. Describe the four major types of organizational structure, and identify the factors a firm should consider in adopting a structure (or structures). 13. Distinguish between a synchronization problem and an integration problem, and describe how firms can solve each type of problem. 14. Describe the benefits of multitasking and multiskilling. 15. Evaluate the trend toward the continuous improvement approach to job design, and explain why this is not the best approach for every firm. 16. Explain how compensation can be structured to reduce employee turnover and enhance productivity. REQUIRED COURSE MATERIAL Required Text: Lazear & Gibbs, Personnel Economics for Managers, 2 nd ed., Wiley, 2009 Supplementary Readings (also required): Readings from sources outside the text are listed on the course outline (below). These will be assigned and posted on elc at the appropriate points in the semester. Additions and changes to this list are quite possible and will be announced in class. ECON 4000, Page 2

3 COURSE TOPICS OUTLINE (This schedule is subject to change with notification.) Readings other than those from the Lazear & Gibbs (LG) text will be posted on elc. To access these readings, click on the "Supplementary Readings" icon. As you complete ALL readings, please pay careful attention to equations, tables and figures. I. Introduction: Using Economics to Study Human Resource Management LG, p. ix-xiv II. Selecting & Investing in Employees Hiring & Recruitment LG, Chap 1-2 Google Answer to Filling Jobs is an Algorithm, NYT, 3 Jan 2007 Economists Learn Matchmaker Role, WSJ Online, 12 Jan 2007 Investing in Human Capital Through Education & Training LG, Chap 3 Managing Turnover LG, Chap 4 Flirting with Disaster: Death & Near-Death Experiences on Wall St., NYT, 21 Sept 2008 Ford is Pushing Buyout Offers to Its Workers, NYT, 26 Feb 2008 III. Organizational Structure & Job Design Allocating Decision-Making Authority LG, Chap 5 Around the Markets: Chicago Traders Beat Firms in Predicting Job Growth, IHT, 6 Mar 2007 Organizational Structure LG, Chap 6 Job Design LG, Chap 7 and Chap 8-Teams (p ONLY) Theory and Practice: Rethinking the Quality-Improvement Program, WSJ, 19 Sept 2005 Southwest. Way Southwest, NYT, 13 Feb 2008 ECON 4000, Page 3

4 IV. Motivation & Incentive-Based Compensation (as time permits) Evaluating & Rewarding Performance LG, Chaps 9-10 You Want Innovation? Offer a Prize, NYT, January 31, 2007 Where the Buses Run on Time, Slate, March 16, 2006 Career-Based Incentives LG, Chap 11 Executive Compensation LG, Chap 12 More Than Ever, It Pays to Be the Top Executive, NYT, May 25, 2007 UNIVERSITY HONOR CODE & ACADEMIC HONESTY POLICY As a University of Georgia student, you have agreed to abide by the University s academic honesty policy, A Culture of Honesty, and the Student Honor Code. All academic work must meet the standards described in A Culture of Honesty found at: Lack of knowledge of the academic honesty policy is not a reasonable explanation for a violation. Questions related to course assignments and the academic honesty policy should be directed to the instructor. LEARNING DISABILITIES OR HEALTH-RELATED ISSUES Students with disability or health-related issues who need a classroom accommodation should make an appointment to see me before August 28. Please present the appropriate documentation at that time. ATTENDANCE POLICY & PREPARATION FOR CLASS Your attendance in this class will be monitored on a random basis. While attendance will not account for a portion of your final grade, remember that excessive absences are often correlated with poor test performance. To prepare for class, please read the assigned sections of the text and any supplementary readings. In addition, prior to each class you should review the material covered in the previous class. I will randomly call on students during class, and I expect you to be able to answer questions and participate in class discussions. (See also "Quizzes," below.) ECON 4000, Page 4

5 ASSIGNMENTS: RESUME & TEAM PROJECT Resume: You must submit a resume to me by Thursday, August 27. Resumes should adhere to the guidelines provided on the UGA Career Center s website: Resumes that do not follow the guidelines will be returned for correction and resubmission. Your resume will not be graded, but you will not be allowed to complete the team project unless you submit an acceptable resume. Team Project: The team project will address a particular firm s approach to a human resources issue. The goal is for you to see how economic concepts and theories covered in this course apply to the real world. The topic and firm chosen by your team must receive my approval by no later than Thursday, October 8. You will be assigned to a team of 3-5 students. Each team will (1) prepare a 4-6 page paper, and (2) give a 10-minute presentation. Each presentation should include the following elements: Background on the company Description of the major human resource issue(s) An economic analysis of the firm's pertinent policies, including discussion of how the firm s approach conforms with (or conflicts with) concepts and theories covered in this course. The paper should provide a full critical description and analysis of the issues covered in the presentation. It should be more detailed than the presentation. All papers are due at the beginning of class on Thursday, November 5. Presentations will be scheduled during the last 2 weeks of class. Your performance on the team project will account for 20 percent of your course grade. Team members will have an opportunity to evaluate each other following the completion of the project, and these evaluations will be considered in determining your individual grade for the project. COURSE REQUIREMENTS Quizzes: Over the course of the semester several unannounced quizzes will be given. Quizzes may include multiple choice, true/false and short answer questions. Quizzes will cover material from the previous class and/or material from any assigned reading for that day. No make-up quizzes will be offered; however, you may drop your lowest quiz grade. Cumulative performance on these quizzes will account for 10 percent of your grade. Team Project: The team project is described in the Assignments section of the syllabus. Your performance on the team project will account for 20 percent of your course grade. Exams: The two midterm exams and the comprehensive final exam will consist of multiple choice and short answer questions based on both the class notes and the required reading. Students arriving late to any exam will not be given extra time to complete the test. Each ECON 4000, Page 5

6 midterm exam will account for 20 percent of your grade, and the final exam will account for 30 percent of your grade. Exam Dates*: Exam 1: Thursday, September 17 Exam 2: Tuesday, October 27 Comprehensive Final Exam: Tuesday, Dec 15, 8 11 am *All exams will be held in our regular classroom. GRADING POLICY Your final average in the course will be based on the following: Unannounced Quizzes: 10 percent (lowest score will be dropped) Team Project: 20 percent 2 Midterm Exams: 20 percent each Comprehensive Final Exam: 30 percent Letter grades for this course will be based on the following cutoffs: A = 93.0 and up A- = B+ = B = B- = C+ = C = C- = D = F = 59.9 and below However, the instructor reserves the right to change the letter grade cutoffs. Grades will be calculated as outlined above. Please do not ask for or expect special favors or consideration of individual circumstances in the determination of your grade. EXAM MAKE-UP POLICY No make-up midterm exams will be given. If you are absent from a midterm exam due to illness or emergency, the weight of that exam will automatically be applied to your comprehensive final exam. If you take an exam you may NOT later choose to drop the score if you are unhappy with it. ECON 4000, Page 6

7 Failure to take the final exam at the scheduled time will result in a grade of zero. Two exceptions to this rule follow: (1) A student with three final examinations scheduled within the same calendar day or two examinations at the same time may petition to reschedule one exam to a different time or day. If one of the conflicting final examinations is a mass exam (such as ACCT 2101, 2102; CHEM 1211, 1212; MSIT 3000), then it will be rescheduled. Please read the information and complete the form located at: Your completed form must be submitted to me by Friday, December 4. (2) If you have a family emergency or serious personal illness that impedes your ability to take the final exam, you may request rescheduling of your final exam. Documentation of the emergency or illness will be required, and you are responsible for promptly making arrangements to reschedule the final exam. CHANGES TO THE SYLLABUS The course syllabus is a general plan for the course; deviations announced to the class by the instructor may be necessary. ECON 4000, Page 7

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