So, The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 2010 was awarded jointly to Peter A. Diamond, Dale T. Mortensen and Christopher A. Pissarides "for their analysis of markets with search frictions".
What that “frictions” is all about? According to a Rediff report “The Laureates' models help us understand the ways in which unemployment, job vacancies, and wages are affected by regulation and economic policy.
This may refer to benefit levels in unemployment insurance or rules in regard to hiring and firing. One conclusion is that more generous unemployment benefits give rise to higher unemployment and longer search times.
It is even more interesting and important to ask how the “unemployment insurance” are framed, identified and delivered to the unemployed people. The Vote Motive political groups make all possible attempts to prolong the time period of unemployment. Of course all the unemployed people would not like to stay with the unemployment insurance or allowances. But if the government provides unemployment insurance or allowance close to market wage or equal to market wages? What will happen? Here is the tricky of muddled political will of misguiding the whole set of economic policies. This is how these Laureates works come in.
Here is the Paul Krugman’s view on this year Nobel Prize winners in Economics Science.