Two Americans and a British-Cypriot economist won the 2010 Nobel economics prize Monday for developing a theory that helps explain why many people can remain unemployed despite a large number of job vacancies.
Peter Diamond, Dale Mortensen and Christopher Pissarides were honored with the 10 million Swedish kronor ($1.5 million) prize for their analysis of the the obstacles that prevent buyers and sellers from efficiently pairing up in markets.
Diamond analyzed the foundations of so-called search markets, while Mortensen and Pissarides expanded the theory and applied it to the labor market.
Since searching for jobs takes time and resources, it creates frictions in the job market, helping explain why there are both job vacancies and unemployment simultaneously, the academy said.
"The laureates' models help us understand the ways in which unemployment, job vacancies and wages are affected by regulation and economic policy," the citation said.