Abd Razak, Dzulkifli
(2010)
'Don't lose feel for the labour force'.
New Sunday Times.
Abstract
THE latest Nobel Prize winners for Economics were reportedly awarded for their work on developing a theory that explains how many people will remain unemployed despite a large number of job vacancies.
In these economically difficult times, the choice of winners seems appropriate because the theory throws some light on why there are both vacant positions and unemployment at the same time, says the Royal Swedish Academy of Sciences.
"One conclusion is that more generous unemployment benefits give rise to higher unemployment and longer search times," says the academy. The winners' work resulted in the Diamond-Mortensen-Pissarides model, named after the three laureates, which is used to estimate how various factors can affect the labour market.
London School of Economics Professor Christopher Pissarides says: "One of the key things we found is that it is important to make sure that people do not stay unemployed for too long so they don't lose their feel for the labour force."
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