The field of human resources management is in transition. An institutional, and somewhat chatty literature is being replaced by more analytic work, which is based on empirical investigation and rigorous theory. The new material, which is now commonly referred to as personnel economics, is being taught in the core curricula at most top business schools. I myself have taught it at Stanford and the University of Chicago. Additionally, much of what forms the essence of the field is creeping into undergraduate courses. As well it should-the modern approach to human resources is directly applicable to business.

My students and I have been frustrated by the absence of a text in the field. In order to expose students to the modern material, it is necessary to assign the original technial papers, which are far too dry and detailed for most readers' purposes. This book is an attempt to fill the current void. The book's format is primarily verbal, with many numerical examples, applications, and graphs. Appendices at the end of chapters present much more technical analyses of some of the material contained in the chapters. The appendices are supplementary; the chapters stand alone without the technical presentations. The reader who is interested in exploring the field further should read the appendices after the chapters and then go on to the original references listed at the end of each chapter.

This book is based on work that I have done over my entire career and that of many other authors as well. Although all the researchers in this field deserve my gratitude, two stand out. Sherwin Rosen, who is my teacher, co-author and colleague, and Gary Becker, a long-time colleague and economic pioneer, influenced my thinking, and therefore this book, enormously. Also important was Melvin Reder, who helped show me that labor economics could be useful in a business school setting. Robert Topel, Kevin Murphy, Kenneth Judd, and John Roberts provided insights through stimulating discussions that have found their way into the pages that follow. I wish to express my sincere gratitude to my doctoral student assistants, Michael Schwarz and Joseph Guzman, for the writing and rewriting that they did. Also, Eric Stout, Nital Patel, and Ryan Ratcliff assisted in providing material for the applications. Finally, I am grateful to Debbie Wheeler and Patricia Farnsworth for excellent clerical assistance.