Sunday, January 12, 2014

Dale T. Mortensen, the top labor economist, died at 74

Dale T. Mortensen, who jointly awarded the 2010 Nobel Memorial Prize in Economic Science with Peter Diamond and Christopher Pissarides because of their strongly influential research on the economics of labor markets and unemployment, was died at 74 on January 9, 2014.

Mortensen has been seen as the pioneer on matching theory research in labor markets that can usefully be applied to insightfully understand unemployment problems in the reality. According to classical theory of economics, sellers and buyers always successfully match to finalize their transaction. If we apply this theory for analyzing labor markets, the results will be that in this case workers as sellers and firms as buyers are easy to match each other. However, this theory does not convincingly work in the real world. Particularly, in labor markets, there still popular phenomena that coincidentally, when job seekers take so long time to achieve their jobs while firms have many vacancies, conversely firms still fail in fulfilling their vacant positions while there are many unemployed try to find jobs even if in prosperous times of the economy. This is called as the“matching problems.” Mortensen has successfully explained this reality and applied to disclosure unemployment in labor markets based on the idea of “market frictions.” This theory is also significant to acquire insights into housing markets, public finance as well as marriage markets.