links for 2010-10-11
What Government Expansion?

A "Structural Unemployment" Nobel Prize

The Prize in Economic Sciences 2010-1.png

Very nice to see:

Diamond, Mortensen, Pissarides Share Nobel Prize (Update1) . By Rich Miller and Toby Alder

Oct. 11 (Bloomberg) -- Peter A. Diamond , Dale Mortensen and Christopher Pissarides shared the 2010 Nobel Prize in Economic Sciences for research into the difficulties of matching supply and demand, particularly in the labor market.

“This year’s three Laureates have formulated a theoretical framework for search markets” such as ones where buyers look for sellers and applicants look for jobs, the Royal Swedish Academy of Sciences, which selects the winner, said today in Stockholm.

Diamond, 70, is a Massachusetts Institute of Technology professor and a candidate for the Federal Reserve Board whose nomination has been held up by Senate Republicans. Pissarides, 62, teaches at the London School of Economics, and Mortensen, 71, is on the faculty at Northwestern University.

“Peter Diamond has analyzed the foundations of search markets,” the academy said. “Dale Mortensen and Christopher Pissarides have expanded the theory and have applied it to the labor market. The laureates’ models help us understand the ways in which unemployment, job vacancies, and wages are affected by regulation and economic policy.”

Search theory tries to explain such conundrums as how high unemployment can be accompanied by a large number of job openings. One conclusion is that more generous jobless benefits lead to higher unemployment as those who are looking for work take longer to find it, the academy said.