• Equilibrium Unemployment Theory Pissarides Pdf Online
• Pissarides 2000 Equilibrium Unemployment Theory Pdf
• Equilibrium Unemployment Theory Pissarides Pdf 2016

Pissarides, Equilibrium Unemployment Theory, 2nd edition, MIT Press, 2000. Mortensen and Pissarides, New Developments in Models of Search in the Labor Market, Ch. 39 in Ashenfelter and Card, Handbook of. And New Frictions, online. An equilibrium concept of unemployment assumes that companies and employees maximize their payoffs lower than rational expectancies and that wages are made up our minds to take advantage of the non-public profits from exchange.

Sir Christopher Antoniou PissaridesFBA (/ˌpɪsəˈriːdiːz/; Greek: Χριστόφορος Αντωνίου Πισσαρίδης; born 20 February 1948^[1]) is a British-Cyprioteconomist. He is the School Professor of Economics & Political Science and Regius Professor of Economics at the London School of Economics, and Professor of European Studies at the University of Cyprus. His research focuses on topics of macroeconomics, notably labour, economic growth, and economic policy. In 2010, he was awarded the Nobel Prize in Economics, jointly with Peter A. Diamond and Dale Mortensen, 'for their analysis of markets with theory of search frictions.'^[4]

Early life[edit]

Pissarides was born in Nicosia, Cyprus,^[5] into a Greek Orthodox family from the village of Agros.^[6]

Pissarides was educated at the Pancyprian Gymnasium in Nicosia.^[6] He received his BA in Economics in 1970 and his MA in Economics in 1971 at the University of Essex. He subsequently enrolled in the London School of Economics, where he received his PhD in Economics in 1973 under the supervision of the mathematical economist Michio Morishima for a thesis titled 'Individual behaviour in markets with imperfect information.'^[7]

Career[edit]

Pissarides is Regius Professor of Economics at the London School of Economics, where he has been since 1976.^[8] He is chairman of the Centre for Macroeconomics, which deploys economists from the University of Cambridge, the London School of Economics, the University College London, the Bank of England, and the National Institute of Economic and Social Research.^[9]

He has held a lectureship at the University of Southampton (1974–76), and visiting professorships at Harvard University (1979–80) and the University of California, Berkeley (1990–91).^[5]

He served as the chairman of the National Economy Council of the Republic of Cyprus during the country's financial crisis in 2012 and resigned to focus on his academic work at the end of 2014. In 2018, in collaboration with Naomi Climer and Anna Thomas, he set up the charity Institute for the Future of Work in London, to promote the establishment of good jobs in the era of automation and artificial intelligence.^[10]

Academic contributions[edit]

Pissarides is mostly known for his contributions to the search and matching theory for studying the interactions between the labour market and the macro economy. He helped develop the concept of the matching function (explaining the flows from unemployment to employment at a given moment of time), and pioneered the empirical work on its estimation. Pissarides has also done research on structural change and growth.

Pissarides' most influential paper is arguably 'Job Creation and Job Destruction in the Theory of Unemployment' (with Dale Mortensen), published in the Review of Economic Studies in 1994.^[11] This paper built on the previous individual contributions that both authors had made in the previous two decades.

The Mortensen–Pissarides model that resulted from this paper has been exceptionally influential in modern macroeconomics. In one or another of its extensions or variations, today it is part of the core of most graduate economics curricula throughout the world.

Pissarides' book Equilibrium Unemployment Theory, a standard reference in the literature of the macroeconomics of unemployment, is now in its second edition, and was revised after Pissarides' joint work with Mortensen, resulting in the analysis of both endogenous job creation and destruction.

Awards and honours[edit]

• Fellow of the Econometric Society, 1997^[7]
• Fellow of the British Academy, 2002^[7]
• Fellow of the European Economic Association, 2005
• IZA Prize in Labor Economics, jointly with Dale Mortensen, 2005^[12]
• Foreign Honorary Member of the American Economic Association, 2011
• Vice-President of the European Economic Association, President in 2011
• Nobel Prize in Economics in 2010, jointly with Dale Mortensen, Peter A. Diamond,^[13] for 'analysis of markets with search frictions'^[13][14]
• The College Historical Society of Trinity College Dublin awarded Pissarides its Gold Medal for Outstanding Contribution to Public Discourse in 2012
• In 2013, Knighted in the year's Birthday Honours for 'services to economics.'^[15]
• Member of the Academy of Athens, 2015^[16]

Selected works[edit]

• Pissarides, C. A. (1979). 'Job Matchings with State Employment Agencies and Random Search'. Economic Journal. 89 (356): 818–833. doi:10.2307/2231501. JSTOR2231501.
• Pissarides, Christopher A. (1985). 'Short-Run Equilibrium Dynamics of Unemployment, Vacancies, and Real Wages'. American Economic Review. 75 (4): 676–690. JSTOR1821347.
• Pissarides, Christopher; Layard, Richard; Hellwig, Martin (1986). 'Unemployment and Vacancies in Britain'. Economic Policy. 1 (3): 499–559. doi:10.2307/1344583. JSTOR1344583.
• Mortensen, D. T.; Pissarides, C. A. (1994). (with Dale Mortensen). 'Job Creation and Job Destruction in the Theory of Unemployment'. Review of Economic Studies. 61 (3): 397–415. doi:10.2307/2297896. JSTOR2297896.
• Equilibrium Unemployment Theory (Second ed.). Cambridge, MA: MIT Press. 2000. ISBN978-0-262-16187-9.Description and chapter-preview links.
• Ngai, L. Rachel; Pissarides, Christopher A. (2007). (with L. Rachel Ngai). 'Structural Change in a Multi-Sector Model of Growth'(PDF). American Economic Review. 97 (1): 429–443. doi:10.1257/aer.97.1.429. JSTOR30034402. Archived from the original(PDF) on 17 July 2012.Cite uses deprecated parameter deadurl= (help)

References[edit]

1. ^ ^abProf Christopher PissaridesArchived 14 October 2010 at the Wayback Machine at debretts.com
2. ^'Christophoros Pissarides won the 2010 Nobel Prize in Economic Sciences'. Archived from the original on 12 May 2013. Retrieved 28 February 2018.Cite uses deprecated parameter deadurl= (help)
3. ^designquest.com.hk. 'Christopher Pissarides - People - HKUST Institute for Emerging Market Studies'. iems.ust.hk. Retrieved 18 June 2019.
4. ^The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 2010 : Peter A. Diamond, Dale T. Mortensen, Christopher A. Pissarides, Noberl Prize Organization website
5. ^ ^ab'Christopher A. Pissarides: Facts'. Nobel Prize Organization website. Retrieved 11 October 2010.
6. ^ ^ab'Christopher Pissarides] autobiography, Nobel Prizes Organization website'(PDF). nobelprize.org. Retrieved 18 June 2019.
7. ^ ^abc'Christopher A. Pissarides CV'(PDF). London School of Economics. Archived from the original(PDF) on 3 December 2013. Retrieved 28 February 2018.
8. ^'News'. Salome.lse.ac.uk. 14 June 2007. Archived from the original on 15 July 2012. Retrieved 11 October 2010.Cite uses deprecated parameter deadurl= (help)
9. ^'New Centre for Macroeconomics launched at LSE', LSE website, 16 January 2013
10. ^'Institute for the Future of Work'. Institute for the Future of Work. Retrieved 18 June 2019.
11. ^Mortensen, Dale T.; Pissarides, Christopher A. (1994). 'Job Creation and Job Destruction in the Theory of Unemployment'(PDF). Review of Economic Studies. 61 (3): 397–415. doi:10.2307/2297896. JSTOR2297896.
12. ^IZA (12 August 2010). 'Prize'. IZA. Retrieved 11 October 2010.
13. ^ ^ab'The Prize in Economic Sciences 2010'. Nobelprize.org. Retrieved 11 October 2010.
14. ^'3 Share Nobel Economics Prize for Market Analysis'. The New York Times. 12 October 2010. Retrieved 12 October 2010.
15. ^'No. 60534'. The London Gazette (Supplement). 15 June 2013. p. 2.
16. ^'Εκλογή του καθηγητή κ. Χριστόφορου Πισσαρίδη, κατόχου βραβείου Νόμπελ Οικονομικής Επιστήμης, ως Τακτικού Μέλους της Ακαδημίας Αθηνών' [Election of Prof. Christopher Pissarides, holder of the Nobel Prize in Economics, as member of the Academy of Athens]. Academy of Athens. 6 November 2015. Archived from the original on 27 December 2015. Retrieved 28 February 2018.Cite uses deprecated parameter deadurl= (help)

External links[edit]

• Christopher A Pissarides personal page at London School of Economics
• Christopher Pissarides' personal website
• 'Equilibrium in the Labour Market with Search Frictions', Nobel Prize lecture, 2010
• Profile and Papers at Research Papers in Economics/RePEc
• Christopher Pissarides commemorative postage stamp issued from the Cyprus Post Office, 8 June 2011

In microeconomics, search theory studies buyers or sellers who cannot instantly find a trading partner, and must therefore search for a partner prior to transacting.

Equilibrium Unemployment Theory Pissarides Pdf Online

Search theory has been influential in many areas of economics. It has been applied in labor economics to analyze frictional unemployment resulting from job hunting by workers. In consumer theory, it has been applied to analyze purchasing decisions. From a worker's perspective, an acceptable job would be one that pays a high wage, one that offers desirable benefits, and/or one that offers pleasant and safe working conditions. From a consumer's perspective, a product worth purchasing would have sufficiently high quality, and be offered at a sufficiently low price. In both cases, whether a given job or product is acceptable depends on the searcher's beliefs about the alternatives available in the market.

More precisely, search theory studies an individual's optimal strategy when choosing from a series of potential opportunities of random quality, under the assumption that delaying choice is costly. Search models illustrate how best to balance the cost of delay against the value of the option to try again. Mathematically, search models are optimal stopping problems.

Macroeconomists have extended search theory by studying general equilibrium models in which one or more types of searchers interact. These macroeconomic theories have been called 'matching theory', or 'search and matching theory'.

Search from a known distribution[edit]

George J. Stigler proposed thinking of searching for bargains or jobs as an economically important problem.^[1][2]John J. McCall proposed a dynamic model of job search, based on the mathematical method of optimal stopping, on which much later work has been based.^[3][4][5] McCall's paper studied the problem of which job offers an unemployed worker should accept, and which reject, when the distribution of alternatives is known and constant, and the value of money is constant.^[6] Holding fixed job characteristics, he characterized the job search decision in terms of the reservation wage, that is, the lowest wage the worker is willing to accept. The worker's optimal strategy is simply to reject any wage offer lower than the reservation wage, and accept any wage offer higher than the reservation wage.

The reservation wage may change over time if some of the conditions assumed by McCall are not met. For example, a worker who fails to find a job might lose skills or face stigma, in which case the distribution of potential offers that worker might receive will get worse, the longer he or she is unemployed. In this case, the worker's optimal reservation wage will decline over time. Likewise, if the worker is risk averse, the reservation wage will decline over time if the worker gradually runs out of money while searching.^[7] The reservation wage would also differ for two jobs of different characteristics; that is, there will be a compensating differential between different types of jobs.

An interesting observation about McCall's model is that greater variance of offers may make the searcher better off, and prolong optimal search, even if he or she is risk averse. This is because when there is more variation in wage offers (holding fixed the mean), the searcher may want to wait longer (that is, set a higher reservation wage) in hopes of receiving an exceptionally high wage offer. The possibility of receiving some exceptionally low offers has less impact on the reservation wage, since bad offers can be turned down.

While McCall framed his theory in terms of the wage search decision of an unemployed worker, similar insights are applicable to a consumer's search for a low price. In that context, the highest price a consumer is willing to pay for a particular good is called the reservation price.

Search from known distributions and heterogeneous costs[edit]

Opportunities might provide payoffs from different distributions. Costs of sampling may vary from an opportunity to another. As a result, some opportunities appear more profitable to sample than others. These problems are referred to as Pandora box problems introduced by Martin Weitzman.^[8] Boxes have different opening costs. Pandora opens boxes, but will only enjoy the best opportunity. With ${\displaystyle x_i}$ the payoff she discovered from the box ${\displaystyle i}$, ${\displaystyle c_i}$ the cost she has paid to open it and ${\displaystyle S}$ the set of boxes she has opened, Pandora receives

${\displaystyle \underset{i\in S}{max}{x}_i-\sum _{i\in S}{c}_i}$

Pissarides 2000 Equilibrium Unemployment Theory Pdf

It can be proven Pandora associates to each box a reservation value. Her optimal strategy is to open the boxes by decreasing order of reservation value until the opened box that maximizes her payoff exceed highest reservation value of the remaining boxes. This strategy is referred as the Pandora's rule.

In fact, the Pandora's rule remains the optimal sampling strategy for complex payoff functions. Wojciech Olszewski and Richard Weber^[9] show that Pandora's rule is optimal if she maximizes

${\displaystyle u\left(x_1,...,x_S\right)-\sum _i^S{c}_i}$

for ${\displaystyle u}$ continuous, non-negative, non-decreasing, symmetric and submodular.

Endogenizing the price distribution[edit]

Studying optimal search from a given distribution of prices led economists to ask why the same good should ever be sold, in equilibrium, at more than one price. After all, this is by definition a violation of the law of one price. However, when buyers do not have perfect information about where to find the lowest price (that is, whenever search is necessary), not all sellers may wish to offer the same price, because there is a trade-off between the frequency and the profitability of their sales. That is, firms may be indifferent between posting a high price (thus selling infrequently, only to those consumers with the highest reservation prices) and a low price (at which they will sell more often, because it will fall below the reservation price of more consumers).^[10][11]

Search from an unknown distribution[edit]

When the searcher does not even know the distribution of offers, then there is an additional motive for search: by searching longer, more is learned about the range of offers available. Search from one or more unknown distributions is called a multi-armed bandit problem. The name comes from the slang term 'one-armed bandit' for a casino slot machine, and refers to the case in which the only way to learn about the distribution of rewards from a given slot machine is by actually playing that machine. Optimal search strategies for an unknown distribution have been analyzed using allocation indices such as the Gittins index.

Matching theory[edit]

More recently, job search, and other types of search, have been incorporated into macroeconomic models, using a framework called 'matching theory'. Peter A. Diamond, Dale Mortensen, and Christopher A. Pissarides won the 2010 Nobel prize in economics for their work on matching theory.^[12]

In models of matching in the labor market, two types of search interact. That is, the rate at which new jobs are formed is assumed to depend both on workers' search decisions, and on firms' decisions to open job vacancies. While some matching models include a distribution of different wages,^[13] others are simplified by ignoring wage differences, and just imply that workers pass through an unemployment spell of random length before beginning work.^[14]

See also[edit]

Equilibrium Unemployment Theory Pissarides Pdf 2016

References[edit]

1. ^Stigler, George J. (1961). 'The economics of information'. Journal of Political Economy. 69 (3): 213–225. doi:10.1086/258464. JSTOR1829263.
2. ^Stigler, George J. (1962). 'Information in the labor market'. Journal of Political Economy. 70 (5): 94–105. doi:10.1086/258727. JSTOR1829106.
3. ^Mortensen, D. (1986). 'Job search and labor market analysis'. In Ashenfelter, O.; Card, D. (eds.). The Handbook of Labor Economics. 2. Amsterdam: North-Holland. ISBN978-0-444-87857-1.
4. ^Lucas, R.; Stokey, N. (1989). Recursive Methods in Economic Dynamics. Cambridge: Harvard University Press. pp. 304–315. ISBN978-0-674-75096-8.
5. ^Adda, J.; Cooper, R. (2003). Dynamic Economics: Quantitative Methods and Applications. Cambridge: MIT Press. p. 257. ISBN978-0-262-01201-0.
6. ^McCall, John J. (1970). 'Economics of information and job search'. Quarterly Journal of Economics. 84 (1): 113–126. doi:10.2307/1879403. JSTOR1879403.
7. ^Danforth, John P. (1979). 'On the role of consumption and decreasing absolute risk aversion in the theory of job search'. In Lippman, S. A.; McCall, J. J. (eds.). Studies in the Economics of Search. New York: North-Holland. ISBN978-0-444-85222-9.
8. ^Weitzman, Martin L. (1979). 'Optimal Search for the Best Alternative'(PDF). Econometrica. 47 (3): 641–654. doi:10.2307/1910412. JSTOR1910412.
9. ^Olszewski, Wojciech; Weber, Richard (2015-12-01). 'A more general Pandora rule?'. Journal of Economic Theory. 160 (Supplement C): 429–437. doi:10.1016/j.jet.2015.10.009.
10. ^Butters, G. R. (1977). 'Equilibrium distributions of sales and advertising prices'. Review of Economic Studies. 44 (3): 465–491. doi:10.2307/2296902. JSTOR2296902.
11. ^Burdett, Kenneth; Judd, Kenneth (1983). 'Equilibrium price dispersion'. Econometrica. 51 (4): 955–969. doi:10.2307/1912045. JSTOR1912045.
12. ^The Prize in Economic Sciences 2010
13. ^Mortensen, Dale; Pissarides, Christopher (1994). 'Job creation and job destruction in the theory of unemployment'. Review of Economic Studies. 61 (3): 397–415. doi:10.2307/2297896. JSTOR2297896.
14. ^Pissarides, Christopher (2000). Equilibrium Unemployment Theory (2nd ed.). MIT Press. ISBN978-0-262-16187-9.