January 20, 2021

Edward P. Lazear, Economist and Presidential Adviser, Dies at 72

In a statement, Mr. Bush called him “a trusted confidant” and “a beloved colleague.”

Edward Paul Lazear was born in New York City on Aug. 17, 1948, and grew up in Los Altos, Calif. He graduated from the University of California, Los Angeles, in 1971 and received his Ph.D. in economics from Harvard University. Professor Lazear began his professional career in 1974 as an assistant professor of economics at the University of Chicago where he met the Nobel Prize winner Gary Becker and adopted his approach of applying economic tools to new domains. Professor Lazear taught there for almost 20 years before joining the Stanford faculty.

“He was the most natural economist I ever came into contact with,” said Paul Oyer, an economist at Stanford’s Graduate School of Business. “He was a deep economic natural thinker; he was born to be an economist.”

Professor Lazear wrote a seminal paper about the relationship between worker pay and a company’s productivity and profits; it was based on a case study of the Safelight Glass Company. Productivity at the business soared when it shifted from paying workers an hourly wage to paying them according to the number of windshields they repaired. Professor Lazear figured out that this improvement hadn’t come about just because people had worked harder to earn more money. Rather, he found, the shift in wage policy had changed the composition of the installers: Slower workers had left the company and faster workers had taken their jobs.

Professor Lazear wrote another famous paper explaining the rationale behind mandatory retirement, which was outlawed by Congress in 1986. He proposed that it is worthwhile for companies to pay workers less than what they are worth to the business when they are young, and then to raise their wages over time, to the point where they are paying them more than they are worth. But that, he found, meant that employees would try to hang on to their job for too long. Mandatory retirement thus helped solve the problem.

“He is the father of a field that has had a lot of influence in the way firms design compensation and make hiring and retention policies,” said Erik Hurst, a labor economist at the University of Chicago. “This is of first-order importance for how people live their lives.”

Article source: https://www.nytimes.com/2020/11/25/business/economy/edward-lazear-dead.html

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