« Fed Explores Overhaul of Its Target Interest Rate | Main | Links for 7-11-14 »

Thursday, July 10, 2014

'In Search of Search Theory'

John Quiggin:

In search of search theory: This is going to be a long and wonkish post, so I’ll just give the dot-point summary here, and let those interested read on below the fold, for the explanations and qualifications.
* The dominant model of unemployment, in academic macroeconomics at least, is based on the idea that unemployment can best be modelled in terms of workers searching for jobs, and remaining unemployed until they find a good match with an employer
* The efficiency of job search and matching has been massively increased by the Internet, so, if unemployment is mainly explained by search, it should have fallen steadily over the past 20 years.
* Obviously, this hasn’t happened, but economists seem to have ignored this fact or at least not worried too much about it
* The fact that search models are more popular than ever is yet more evidence that academic macroeconomics is in a bad way ...

    Posted by on Thursday, July 10, 2014 at 10:53 AM in Economics, Unemployment | Permalink  Comments (12)

          


    Comments

    Feed You can follow this conversation by subscribing to the comment feed for this post.