Research
Lazear is the founding editor of the Journal of Labor Economics. He has published over 100 scholarly articles,
Most of his work has to do with motivating and compensating workers. One of his most famous papers, "Rank-Order Tournaments as Optimum Labor Contracts," argues that in certain circumstances, it is in a firm's best interest to rank its employees and pay particularly high wages to the top-ranked employees. This helps explain why the highest jobs, like chief executive officer, often draw paychecks that are much higher than the next-highest jobs, even though the skill differences between those employees are not very high. It also helps explain the partnership structure of law firms, in which associate lawyers compete to become partners and earn a much higher salary. He has also analyzed how peer pressure and mandatory retirement can help reduce principal–agent problems in companies. He also recently studied how entrepreneurs are developed.
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