Dale Mortensen, Distinguished Fellow 2008
Dale Mortensen used the theory of job search to enrich the theory pertaining to the dynamics of employment and wages. His research yields fundamental insights into the formation of equilibrium prices, and why it is that markets such as labor markets or housing markets may fail to clear. His insight, that the random arrival of trading partners creates frictions, has become a leading technique for analysis of labor markets and labor market policy. Mortensen’s research shows how search intensity and the decision to accept a job offer determine the distribution of unemployment durations. He clarifies the conditions under which search equilibria achieve efficient resource allocation, taking transactions costs into account. He also investigates whether there are opportunities for improving allocative efficiency by opening search-saving sidemarkets. His models, which are widely used in labor economics and macroeconomics, have greatly enriched research on labor market dynamics and cyclical adjustment, and have formed the foundation for the explanation of unemployment as an equilibrium phenomenon. The development of equilibrium dynamic models designed to account for wage dispersion, the time series behavior of job and worker flows, and economic growth through product innovation are continuing topics of his research.