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

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

Video Snowstorm Sweeps Northeastern US

'This is nothing like we feared it would be,' New York City Mayor Bill de Blasio says; he had warned storm could be one of worst in city history More

Millions of Displaced Nigerians Struggle With Daily Existence

Government acknowledges over a million people displaced in 2014 due to fight against Boko Haram insurgency More

Facebook: Internal Error to Blame for Outages

Temporary outage appeared to spill over and temporarily slow or block traffic to other major Internet sites 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.
Obama Urges Closer Economic Ties During Historic India Visiti
X
Aru Pande
January 26, 2015 9:33 PM
U.S. President Barack Obama says the United States and India must do better to capitalize on untapped potential in their economic relationship - by removing some of the roadblocks to greater trade and investment. As VOA correspondent Aru Pande reports from New Delhi, Obama spoke after participating in India’s Republic Day celebration.
Video

Video Obama Urges Closer Economic Ties During Historic India Visit

U.S. President Barack Obama says the United States and India must do better to capitalize on untapped potential in their economic relationship - by removing some of the roadblocks to greater trade and investment. As VOA correspondent Aru Pande reports from New Delhi, Obama spoke after participating in India’s Republic Day celebration.
Video

Video US, EU Threaten New Russia Sanctions Over Ukraine

U.S. President Barack Obama has blamed Russia for an attack by Ukrainian separatists that left dozens dead in the port of Mariupol and cast further doubt on the viability of last year’s cease-fire with the Kyiv government. VOA’s Michael Bowman reports from Washington.
Video

Video White House Grapples With Yemen Counterterrorism Strategy

Reports say the U.S. has carried out a drone strike on suspected militants in Yemen, the first after President Barack Obama offered reassurances the U.S. is continuing its counterterrorism operations in the country. The future of those operations has been in question following the collapse last week of Yemen’s government. VOA White House correspondent Luis Ramirez reports.
Video

Video Kerry Warns Against Violence in Nigeria Election

US Secretary of State John Kerry visited Nigeria Sunday in a show of the level of concern within the U.S. and the international community over next month’s presidential election. Chris Stein reports.
Video

Video Zoo Animals Show Their Artistic Sides

The pursuit of happiness is so important, America's founding fathers put it in the Declaration of Independence. Any zookeeper will tell you animals need enrichment, just like humans do. So painting, and even music, are part of the Smithsonian National Zoo's program to keep the animals happy. VOA’s June Soh met some animal artists at the zoo in Washington. Faith Lapidus narrates.
Video

Video Worldwide Photo Workshops Empower Youth

Last September, 20 young adults from South Sudan took part in a National Geographic Photo Camp. They are among hundreds of students from around the world who have learned how to use a camera to tell the stories of the people in their communities through the powerful medium of photography. Three camp participants talked about their experiences recently on a visit to Washington. VOA’s Julie Taboh reports.
Video

Video Saudi, Yemen Developments Are Sudden Complications for Obama

The death of Saudi Arabia's King Abdullah and the collapse of Yemen’s government have cast further uncertainty on U.S. efforts to fight militants in the Middle East and also contain Iran’s influence in the region. VOA White House correspondent Luis Ramirez reports on the new complications facing the Obama administration and its Middle East policy.
Video

Video Progress, Some Areas of Disagreement in Cuba Talks

U.S. and Cuban officials are reporting progress from initial talks in Havana on re-establishing diplomatic ties. U.S. Assistant Secretary of State (for Western Hemisphere Affairs) Roberta Jacobson said while there was agreement on a broad range of issues, there also are some “profound disagreements” between Washington and Havana. VOA State Department correspondent Pam Dockins has the story.
Video

Video US, Japan Offer Lessons as Eurozone Launches Huge Stimulus

The Euro currency has fallen sharply after the European Central Bank announced a bigger-than-expected $67 billion-a-month quantitative easing program Thursday - commonly seen as a form of printing new money. Henry Ridgwell reports for VOA from London on whether the move might rescue the eurozone economy -- and what lessons have been learned from similar programs around the world.
Video

Video Nigerian Elections Pose Concern of Potential Conflict in 'Middle Belt'

Nigeria’s north-central state of Kaduna has long been the site of fighting between Muslims and Christians as well as between people of different ethnic groups. As the February elections approach, community and religious leaders are making plans they hope will keep the streets calm after results are announced. Chris Stein reports from the state capital, Kaduna.
Video

Video As Viewership Drops, Obama Puts His Message on YouTube

Ratings reports show President Obama’s State of the Union address this week drew the lowest number of viewers for this annual speech in 15 years. White House officials anticipated this, and the president has decided to take a non-traditional approach to getting his message out. VOA White House correspondent Luis Ramirez reports.
Video

Video S. Korean Businesses Want to End Trade Restrictions With North

Business leaders in South Korea are calling for President Park Geun-hye to ease trade restrictions with North Korea that were put in place in 2010 after the sinking of a South Korean warship.Pro-business groups argue that expanding trade and investment is not only good for business, it is also good for long-term regional peace and security. VOA’s Brian Padden reports.

Circumventing Censorship

An Internet Primer for Healthy Web Habits

As surveillance and censoring technologies advance, so, too, do new tools for your computer or mobile device that help protect your privacy and break through Internet censorship.
More

All About America

AppleAndroid

World Currencies

EUR
USD
0.8893
JPY
USD
118.31
GBP
USD
0.6660
CAD
USD
1.2459
INR
USD
61.427

Rates may not be current.