Nobel 2010 - Economics and Unemployment

With the Nobel Prize in economics 2010 (its actually the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel) being awarded jointly to Peter A. Diamond, Dale T. Mortensen and Christopher A. Pissarides "for their analysis of markets with search frictions", I can’t help but recall the aspects of unemployment I came across in some economics class.

Frictional, structural and cyclical unemployment were the forms/types of unemployment I recall and in retrospect have experienced over the past couple of years. With the ‘global financial crises’ cyclical unemployment hit the finance industry hard! Lay-offs did the rounds and firms resisted hiring. Those of us fresh from school were hit hard as re-entry to the job market was nothing but going against the grain.

With the recession having been declared to be a thing of the past (at least in the US) and financial markets recording commendable returns, hiring is back in the cards for many and frictional unemployment is all the rage; the unemployed and those seeking to fill positions have incomplete information about each other hence many ideal matches are not immediately matched with each other.

With structural unemployment, the structural characteristics of the economy make it difficult for job seekers to find employment and for employers to hire workers mainly due to technological changes.

The economics of unemployment aside, my real surprise was the general time lag between various works and the time when a Nobel Prize is awarded. Then again, as Nicholas Taleb put it in The Black Swan, Nobel Prizes should just be ignored!!