Yale graduate andMassachusetts Institue of Technology professor Peter A. Diamond ’61 won the 2010 Nobel Memorial Prize for Economic Sciences on Monday for his work examining the job market.
Diamond was recognized along with his colleagues Dale T. Mortenson, a professor at Northwestern University, and Christopher A. Pissarides of the London School of Economics and Political Science. The three collaborated on models that provide insight into the ways in which regulation and economic policy affect unemployment, job vacancies and wages.
Diamond said he heard the news as his wife was driving him home from the Boston airport.
“Fortunately, I was sitting down, and I wasn’t behind the wheel,” he joked Monday morning at an MIT news conference.
Diamond said policymakers should make sure that unemployed workers do not remain jobless for so long that they become detached from the labor force. But he said he is optimistic that the economy will recover.
“I think the economy is very adaptive,” he said. “Workers and employers will adapt to what will make the economy function.”
Diamond received his Ph.D. from MIT in economics after graduating from Yale College in 1961. He then taught at the University of California, Berkeley, but returned to MIT as a faculty member in 1966 and has remained in Cambridge since then.
Yale economics professor Giuseppe Moscarini, who specializes in labor economics, said the laureates’ work is the foundation of his reseach and that of any scholar who studies unemployment, wages and worker turnover. It was “about time” such scholarswin the Nobel Prize, he added.
“Their work successfully reconciles the rigor and elegance of equilibrium analysis with the messy tangle of imperfections that characterize real-world labor markets, such as lack of information about existing vacancies,” he said.
Yale econometrics professor C. Lanier Benkard said Diamond’s award suggests that the prize committee appreciates that labor markets do not always behave according to traditional models.
Ben Polak, the chairmanof the Yale Department of Economics, said that he was delighted to hear that Diamond had won the Nobel Prize.
“I hope his winning the Nobel Prize will push people to go back and read some of his papers again,” Polak said in an e-mail, citing some of Diamond’s papers about taxation, overlapping-generation economiesand risk aversion as “classics” that have changed the way people view economics.
In addition to the Nobel Prize, Diamond received recognition from President Barack Obama when he was nominated in April for a position on the board of the U.S. Federal Reserve, though the Senate rejected the nomination based on a procedural rule. But Diamond is back in the running after President Obama re-nominated him on Sept.12.
Although the first Nobel Prizes were awarded in 1901, Rangar Frisch and Jan Tinbergen earned the first Nobel Prize for Economics in 1969. This year’s winners will received 10 million Swedish kronor, or about $1.5 million.
Correction: October 13, 2010
An earlier version of this article misstate that Nobel Laureate Peter Diamond ’61 is a member of the Yale College Class of 1960. He graduated in 1961.