NU Professor Wins Nobel Prize for Economics

By Chuck Sudo in News on Oct 11, 2010 9:30PM

Dale L. Mortensen, the Ida C. Cook Professor of Economics at Northwestern University, was awarded the Nobel Prize for economics. Professor Mortensen will share the $1.5 million prize with MIT professor and Federal Reserve Board nominee Peter Diamond and Christopher Pissarides of London School of Economics and Political Science.

The three were awarded the Nobel for their work in analyzing "markets with search frictions." In lay speak, that means that they developed a system of determining why there are so many people unemployed at the same time as there are a large number of job openings and, by extension, explain the ways in which unemployment, job vacancies and wages are affected by regulation and economic policy and can also be applied to other areas, including the housing market. This, of course, goes counter to the current GOP talking point that people are unemployed because they don't want to move where the jobs are.

Speaking from Aarhus University in Denmark, where he is a visiting faculty member, Mortensen chided a "dysfunctional" lending environment that's made it difficult for small service business to finance hiring. "Many service jobs are in small establishments and firms. And they're finding it difficult to find financing from banks. Banks finance payrolls. They're (small businesses) finding it difficult to finance their ... working capital," he said.

Much of Mortensen's work dates back 30 years, but is timely now as the country undergoes what has been described as a "jobless" economic recovery.