Edward P. Lazear, a pioneering Stanford University labor economist who advised President George W. Bush during the financial crisis, died Monday. He was 72 years old.
The cause was pancreatic cancer, said the university. It was not said where he died.
Professor Lazear is best known as the founder of what came to be known as human resource economics, which seeks to understand how companies hire, retain, and pay employees. He also founded the Journal of Labor Economics and the Society of Labor Economists.
But perhaps his most critical role was to serve as chairman of President Bush’s Council of Economic Advisers when the American financial system collapsed after a real estate and debt bubble burst and the federal government was forced to spend hundreds of billions of dollars to bail out financial institutions and to save a declining economy.
“Eddie Lazear was a rare combination – an exceptional academic economist and a dedicated civil servant who brought that intellect and ability to solve major political problems,” said Condoleezza Rice, director of the Hoover Institution at Stanford, where Professor Lazear was a senior fellow .
In a statementMr. Bush called him “a trusted confidante” and “a beloved colleague”.
Edward Paul Lazear was born in New York City on August 17, 1948 and grew up in Los Altos, California. In 1971 he completed his studies at the University of California in Los Angeles and received his PhD. in Economics from Harvard University, where he worked with Nobel Prize winner Gary Becker and adopted his approach of applying economic tools to new areas.
Professor Lazear began his professional career in 1974 as an assistant professor of economics at the University of Chicago. He taught there for almost 20 years before moving to Stanford Faculty.
“He was the most natural economist I’ve ever come into contact with,” said Paul Oyer, an economist at Stanford’s Graduate School of Business. “He was a profound economic thinker of nature. He was born an economist. “
Professor Lazear wrote groundbreaking work about the relationship between compensation of employees and productivity and profit of a company; It is based on a case study from the Safelight Glass Company. The company’s productivity increased as it shifted from paying workers an hourly wage based on the number of windshields repaired. Professor Lazear found that just because people had worked harder to make more money, that improvement hadn’t come about. Rather, he found that the change in wage policy had changed the makeup of the plumbers: slower workers had left the company and faster workers had taken over.
Professor Lazear wrote another famous paper that explains the reasons for mandatory retirementHe suggested that it pays for companies to pay workers less at a young age than they are worth to the company, and then increase their wages over time to the point where they pay them more than they are worth are. However, he found that employees would try too long to hold onto their jobs. Compulsory retirement thus helped solve the problem.
“He is the father of a field that has had a huge impact on the way companies shape compensation and set recruitment and retention policies,” said Erik Hurst, labor economist at the University of Chicago. “This is first-order for the way people live their lives.”
Professor Lazear fell straight into the economic policy spectrum. He was a strong critic of the Obama administration’s fiscal policy. He later campaigned for the tax cuts signed by President Trump in 2017. He believed in the efficiency of markets and disliked the minimum wage and other government interventions.
But his ideological opponents also recognized his integrity and commitment to rigorous thinking.
“I have admired the purity of his commitment to business,” said Lawrence H. Summers, former Harvard President and Treasury Secretary. “It is very rare among economists working on things that affect politics.”
Lawrence Katz, a professor of economics at Harvard, said Professor Lazear’s work had often reached conclusions that ran counter to conservative views and guidelines.
“He wasn’t ideological in all things,” said Professor Katz, referring to Professor Lazear’s work with Richard B. Freeman on Value of works councilsused in many European countries to give workers a voice and power to negotiate with employers.
Professor Lazear’s work also served to dispel the notion popular among American Conservatives that Measures to ensure job security condemned Europe to high unemployment and low productivity.
During the late 2000s financial crisis and its aftermath, Professor Lazear was a critical voice calling for attention to the volatile labor market as millions of people lost their jobs and many people struggled for work for months or even years.
“You can see these concerns for workers and their skills in his political work, and see how difficult it is to switch industries,” said Austan Goolsbee, who chaired the Council of Economic Advisers during the Obama administration.
Professor Lazear is survived by his wife Victoria Lazear and daughter Julie Lazear.