News / Economy

Three Share Economics Nobel for Search Friction Work

Seated, from L-R:  Professor Bertil Holmlund, Permanent secretary of the Royal Academy of Sciences Staffan Normark (C) and Professor Per Krusell announce the Nobel Prize in Economic Sciences. Stockholm, 11 Oct 2010
Seated, from L-R: Professor Bertil Holmlund, Permanent secretary of the Royal Academy of Sciences Staffan Normark (C) and Professor Per Krusell announce the Nobel Prize in Economic Sciences. Stockholm, 11 Oct 2010
TEXT SIZE - +

Two Americans and a British-Cypriot have been awarded the 2010 Nobel Prize for Economics in honor of their research into search friction, which attempts to explain the difficulties of matching supply and demand, particularly in the labor market.

The Royal Swedish Academy of Sciences today awarded the economics Nobel to Peter Diamond of the Massachusetts Institute of Technology; Dale Mortensen of Northwestern University; and Christopher Pissarides of the London School of Economics.  The Academy's citation credits the three with "help[ing] us understand the ways in which unemployment, job vacancies, and wages are affected by regulation and economic policy."

Search friction theory explores such problems as how high unemployment can be accompanied by a large number of job openings.  The work of the three newest Nobel laureates looks at such apparent contradictions as when improvements in productivity - economic output per unit of labor - can actually lead to reduced unemployment.

Professor Mats Persson, a member of the academy, explains:

"Search friction is there in the real world. You cannot do much about these frictions; they are just there," Persson said.  "But they mean that the market does not function like the traditional perfect competition market.  It is much more complicated than that, and much more strange.  For example, there could be underutilized resources, or consumer goods that go unsold at the same time there are customers trying to find exactly these products, and in the labor market there is unemployment at the same time there are vacancies."

Reached by telephone at his office at the London School of Economics, Christopher Pissarides said his research had clear implications for policy makers, especially during this period of high unemployment in both Europe and North America.

"What we should really be doing is making sure that the unemployed do not stay unemployed for too long," said Pissarides.  "We should try to give them direct work experience - not necessarily expensive training programs, but direct work experience so that they do not lose their attachment to the labor force.  Eventually they will move into more regular types of jobs."

One of the winners, 70-year-old Professor Peter Diamond of MIT, once taught Ben Bernanke, current head of the U.S. Federal Reserve Board, and has himself been nominated by President Barack Obama to a seat on the Fed's board of governors.  That nomination has been blocked since April by Senate Republicans.

The economics prize was not among the five awards specified in Alfred Nobel's 1895 will.  Established and endowed in 1968 by Sweden's Riksbanken central bank, the prize is accompanied by the same cash award of about $1.3-million as the prizes for medicine, chemistry, physics, literature and peace.  All Nobel Prize winners are invited to Stockholm and Oslo, Norway for formal award ceremonies in December.

You May Like

'Exceptionally Lucky' US Boy Survives Flight in Wheel Well

The boy was unconscious for most of the flight, and appeared to be unharmed after enduring the extremely cold temperatures and lack of oxygen More

US Anti-Corruption Law Snags Major Tech Company

The Foreign Corrupt Practices Act was signed into law by President Jimmy Carter in December, 1977 More

Cameron Criticized for Calling UK 'Christian Country'

Letter from scientists, academics and writers says the prime minister is fostering division by repeatedly referring to England as a 'Christian country' More

This forum has been closed.
Comments
     
There are no comments in this forum. Be first and add one

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Ukraine, Russia, United in Faith, Divided in Politicsi
X
Michael Eckels
April 19, 2014
There is a strong historical religious connection between Russia and Ukraine. But what role is religion playing in the current conflict? In the run-up to Easter, Michael Eckels in Moscow reports for VOA.
Video

Video Ukraine, Russia, United in Faith, Divided in Politics

There is a strong historical religious connection between Russia and Ukraine. But what role is religion playing in the current conflict? In the run-up to Easter, Michael Eckels in Moscow reports for VOA.
Video

Video Face of American Farmer is Changing

The average American farmer is now 58 years old, and farmers 65 and older are the fastest growing segment of the population. It’s a troubling trend signaling big changes ahead for American agriculture as aging farmers retire. Reporter Mike Osborne says a new report from the U.S. Census Bureau is suggesting what some of those changes might look like... and why they might not be so troubling.
Video

Video Donetsk Governor: Ukraine Military Assault 'Delicate But Necessary'

Around a dozen state buildings in eastern Ukraine remain in the hands of pro-Russian protesters who are demanding a referendum on self-rule. The governor of the whole Donetsk region is among those forced out by the protesters. He spoke to VOA's Henry Ridgwell from his temporary new office in Donetsk city.
Video

Video Drones May Soon Send Data From High Seas

Drones are usually associated with unmanned flying vehicles, but autonomous watercraft are also becoming useful tools for jobs ranging from scientific exploration to law enforcement to searching for a missing airliner in the Indian Ocean. VOA’s George Putic reports on sea-faring drones.
Video

Video New Earth-Size Planet Found

Not too big, not too small. Not too hot, not too cold. A newly discovered planet looks just right for life as we know it, according to an international group of astronomers. VOA’s Steve Baragona has more.
Video

Video Copts in Diaspora Worry About Future in Egypt

Around 10 percent of Egypt’s population belong to the Coptic faith, making them the largest Christian minority in the Middle East. But they have become targets of violence since the revolution three years ago. With elections scheduled for May and the struggle between the Egyptian military and Islamists continuing, many Copts abroad are deeply worried about the future of their ancient church. VOA religion correspondent Jerome Socolovsky visited a Coptic church outside Washington DC.
Video

Video Critics Say Venezuelan Protests Test Limits of Military's Support

During the two months of deadly anti-government protests that have rocked the oil-rich nation of Venezuela, President Nicolas Maduro has accused the opposition of trying to initiate a coup. Though a small number of military officers have been arrested for allegedly plotting against the government, VOA’s Brian Padden reports the leadership of the armed forces continues to support the president, at least for now.
Video

Video More Millenials Unplug to Embrace Board Games

A big new trend in the U.S. toy industry has more consumers switching off their high-tech gadgets to play with classic toys, like board games. This is especially true among the so-called millenial generation - those born in the 1980's and 90's. Elizabeth Lee has more from an unusual café in Los Angeles, where the new trend is popular and business is booming.
Video

Video Google Buys Drone Company

In its latest purchase of high-tech companies, Google has acquired a manufacturer of solar-powered drones that can stay in the air almost indefinitely, relaying broadband Internet connection to remote areas. It is seen as yet another step in the U.S. based Web giant’s bid to bring Internet to the whole world. VOA’s George Putic reports.
AppleAndroid

World Currencies

EUR
USD
0.7217
JPY
USD
102.17
GBP
USD
0.5949
CAD
USD
1.1009
INR
USD
60.326

Rates may not be current.