Nobel Prize Awards Economists Due Recognition
An aspect of the work that earned these three individuals this prestigious recognition investigates the effect of regulation and economic policy on job vacancies, unemployment and wages. With rampant unemployment playing havoc with consumer spending and economic recovery, the fact that there are job vacancies presents a conundrum. Dale Mortensen’s findings revealed that the rigidity of the labor market is likely a causal factor in unemployment, mainly because it takes time for job-seekers to find work in their field of expertise at the highest pay available. Peter Diamond demonstrated that unemployment insurance provided by the government gives workers the opportunity to spend extra time searching for a job to suit their capabilities. While this has the result of improving labor market efficiency, it also had the effect of prolonging unemployment. Mortensen and Pissarides provided insight into why unemployment levels skyrocket in a recession, but fall more slowly during economic recovery, with all three economists agreeing that the job market is likely to take some time to improve following the global economic crisis.
The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel was not among the awards stipulated in the renowned Swiss innovator’s will, but it has come to be recognized along with other Nobel prizes awarded to leaders in various fields, with the nomination and selection process being carried out by the Royal Swedish Academy of Sciences. The award was first made in 1968 to mark the 300th anniversary of the sponsor, Sweden’s central bank Sveriges Riksbank, with the first award being jointly awarded to Dutch economist Jan Tinbergen and Norwegian economist Ragnar Frisch.