Two Americans, including President Obama's latest nominee to the Federal Reserve Board, shared the 2010 Nobel economics prize with a British Cypriot. The trio was lauded for its work in the area of search theory, in particular how it applies to employment markets. Search theory, greatly oversimplified, is the idea that supply and demand don't always match up as neatly as the lines in Macro 101 suggest they might due to external factors, or 'frictions.'
Applied to the labor market of today, the inference is that, even when our economy starts to recover, frictions may make it difficult for the supply and demand sides of the market to match up. In other words, even if 10 employers need the 10 workers who are looking for jobs, reality might get in the way.
The award is certainly timely, even if none of the quotes from the winners provide much insight into how to alleviate some of the 'frictions' that seem to exist in today's job market. In any case, it is certainly less controversial than the award for peace, this year or last for that matter...
No comments:
Post a Comment