This year’s Nobel Prize in economics goes to a triumvirate of researchers—MIT’s Peter Diamond, Northwestern University’s Dale Mortensen and Christopher Pissarides of the London School of Economics—whose work focuses on a subject that’s all too apropos these days: unemployment. —KA
The problem with unemployment is that, theoretically, it shouldn’t exist. Efficient market theory says unemployed workers should always be able to find a job if they just lower their standards enough, just as all employers should be able to find workers if they just lower theirs.
By this theory, all unemployment is voluntary.
Diamond, Mortensen and Pissarides reject that theory, arguing that it’s costly to find just the right job — that is, one that matches your skills and abilities and pays you what you are worth.