Sunday, October 17, 2010
2010 Economics Nobel Reflects Mood of the Times
It is perhaps not surprising, in a time when high unemployment is on every economic-minded person's mind, that this year's Nobel Prize in Economics went to Peter A. Diamond, Dale T. Mortensen, and Christopher A. Pissarides for their "analysis of markets with search frictions." These men studied the causes of frictional unemployment, and were among the first to suggest that unemployment benefits might make the economy more efficient because not every job is for every person. They effectively brought into the labor markets of their day the issues of stretches of unemployment, job hunts, moves from job to job, and the rate at which workers were hired or fired. They also argued that policymaker could affect and to some extent choose the natural rate of unemployment. What do you think - was their selection as Nobel laureates affected by the economic conditions when the Prize was awarded?
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This is a very interesting article, I read it yesterday and was also considering posting it. Their award for the Nobel was definitely influenced by the current economic conditions, even though they had been working on this theory since the 70s and 80s. It is not only about the causes of frictional unemployment, but the inefficiencies that go with it. It can be a long, heavy process and I don't see any problem with policies aimed at incentives for hiring as fast as possible. Obviously these men are very intelligent and also have a great relationship with Fed Res. Chairman Bernanke so, hopefully, for the sake of all of us they can figure out how to help this economy soon.
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