A British-Cypriot and two Americans, including one nominated by President Barack Obama to the US Federal Reserve board, won the 2010 Nobel Prize for Economics for their work to explain persistent unemployment.
The prize committee said the trio's work had emerged as an important guide to why unemployment may remain high, even as new job opportunities emerge following the recession. Christopher Pissarides, a 62-year-old professor at the London School of Economics, who was born in Cyprus, said he believed he was working in an area where economists could be of real help to society.
He said he felt "a mixture of surprise and happiness" about the award. The prize is shared with US professors Dale Mortenson, 71, and Peter Diamond, 70, for their work on how the process of searching for jobs affects unemployment. Whereas classical theory suggests that potential employees and employers find each other immediately, in fact there are plenty of frictions in the jobs market. Mr Diamond, of Massachusetts Institute of Technology, was nominated to the Fed's board earlier this year, but Republicans held up his appointment because of his work arguing for higher taxes to pay for social security.
Speaking yesterday, he predicted that stubbornly high unemployment in the West would decline slowly. "With suitable macroeconomic policies, there is no reason to think that once we get through this we will not get back to normal unemployment," he said. "We are starting from a place with unusually high unemployment. The process is going to be slow and that's painful for the entire economy."