Prof. Dale Mortensen, winner of the 2010 Nobel Prize in Economic Sciences, gave a lecture geared specifically toward Northwestern’s undergraduate community. Hosted by the Undergraduate Economics Society, Mortensen’s lecture featured his new model for unemployment and its relation to the current economic “slump.”
About 200 attendees packed Harris Hall 107 on Monday night to hear what NU economics Prof. Mark Witte called one of the most “important developments” in modern economics. The model, developed by Mortensen and his colleagues Christopher Pissarides of the London School of Economics and Political Science and Massachusetts Institute of Technology Prof. Peter Diamond, defines “search friction” as a direct cause of unemployment.
The research questioned the “classical” model of labor markets that contended employment is based solely on supply and demand and that unemployment was a byproduct of a wage over the market-clearing wage.
“We see job vacancies and unemployment at the same time,” Mortensen said. “That doesn’t fit with the classical model.”
In times like the most recent recession and continuing with the ongoing economic slump, Mortensen said, available jobs from firms did not match with those seeking jobs in a dramatically changed environment. He used the hypothetical example of construction workers who could not easily be placed in a market that demands more manufacturing workers to describe the problem presented by search friction.
“It’s not that there are no jobs in bad times,” he said. “It’s just a difference in scale.”
Mortensen noted the economy of the United States has faced slumps in the past, but the long duration of the current economic duress was particularly distinct.
UES co-president Stephanie Lo said she hoped Mortensen could connect with the undergraduate audience and provide a fresh perspective to labor economics.
“We were concerned that he might be too busy,” the Weinberg junior said. “It shows how good of a connection he has with undergrads.”
Weinberg senior Lucas Zalduendo said he has seen Mortensen’s presentations several times before. He said much of Mortensen’s research could directly relate to his experience as an economics major.
“I was glad he presented it in as open a way as possible,” Zalduendo said. “It gets really technical for a general audience, but still, it was good.”
Mortensen has been part of NU’s faculty since 1965, had two children attend NU and will have a granddaughter begin her undergraduate studies at NU as part of the Class of 2015. Mortensen gained widespread recognition following his win of a Nobel Prize in 2010.
“I don’t think it was my good looks that brought me to the stage today, ” he said.
