Equilibrium in the Labour Market with Search Frictions

Abstract

[evdate 2011-03-21] IAS Nobel Lecture. UC RUSAL President's Forum. 2010 Nobel Laureate in Economic Sciences.

Abstract: This lecture describes the search and matching model of the labour market that was awarded the Nobel prize in Economics in 2010. It briefly describes the contributions of each of the three laureates, which were largely independently done, concluding with the statement of the full model. It then applies the model to some key issues in labour markets. It first shows that the model can be used to compare the performance of a labour market over time and across countries, using examples from real economies. It then discusses wage setting, showing that wages may not be fully flexible. Finally, it discusses the policy of employment protection legislation and its implications for job creation and unemployment. Prof Pissarides specialises in the economics of unemployment, labour-market theory, labour-market policy and more recently he has written about growth and structural change. He has written extensively in professional journals and his book Equilibrium Unemployment Theory, now in its second edition, is a standard reference in the economics of unemployment.

Duration: 79 min.