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How can economic policy affect unemployment? Why are so many people unemployed at the same time that there are a large number of job openings? How can economic policy affect unemployment? This year's Nobel Prize Laureates in Economy - Peter A. Diamond, Dale T. Mortensen and Christopher A. Pissarides - have developed a theory which can be used to answer these questions.

e-focus reports on the 2010 Nobel Prize Laureates in Economy, Literature, Medicine, Physics, Chemistry and Peace.

Economy

The Royal Swedish Academy of Sciences has decided to award The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel for 2010 to Peter A. Diamond, Dale T. Mortensen and Christopher A. Pissarides "for their analysis of markets with search frictions".

On many markets, buyers and sellers do not always make contact with one another immediately. This concerns, for example, employers who are looking for employees and workers who are trying to find jobs. Since the search process requires time and resources, it creates frictions in the market. On such search markets, the demands of some buyers will not be met, while some sellers cannot sell as much as they would wish. Simultaneously, there are both job vacancies and unemployment on the labor market.

This year's three Laureates have formulated a theoretical framework for search markets. Peter Diamond has analyzed the foundations of search markets. Dale Mortensen and Christopher Pissarides have expanded the theory and have applied it to the labor market. 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.

Search theory has been applied to many other areas in addition to the labor market. This includes, in particular, the housing market. The number of homes for sale varies over time, as does the time it takes for a house to find a buyer and the parties to agree on the price. Search theory has also been used to study questions related to monetary theory, public economics, financial economics, regional economics, and family economics.

Literature

The Swedish Academy has awarded The Nobel Prize in Literature 2010 to Mario Vargas Llosa "for his cartography of structures of power and his trenchant images of the individual's resistance, revolt, and defeat".

Peruvian by birth and a truly international citizen, Mario Vargas Llosa embraces multiple genres (novels, plays, essays), and politics too, in his commitment to social change. He is one of Latin America's most significant novelists and essayists, and one of the leading authors of his generation. Some critics consider him to have had a larger international impact and worldwide audience than any other writer of the Latin American Boom.

Mario Vargas Llosa rose to fame in the 1960's with novels such as The Time of the Hero (La ciudad y los perros, literally The City and the Dogs, 1963/1966), The Green House (La casa verde, 1965/1968), and the monumental Conversation in the Cathedral (Conversación en la catedral, 1969/1975).

Medicine

The Nobel Assembly at Karolinska Institutet has awarded The Nobel Prize in Medicine 2010 to Robert G. Edwards "for the development of In Vitro Fertilization - IVF". Robert G. Edwards' achievements have made it possible to treat infertility as he succeeded in accomplishing fertilization of human egg cells in test tubes. Thus, the world's first 'test tube baby' was born July 25th, 1978.

Approximately four million individuals have so far been born following IVF. Many of them are now adult and some have already become parents. A new field of medicine has emerged, with Robert G. Edwards leading the process all the way from the fundamental discoveries to the current, successful IVF therapy. His contributions are regarded to represent a milestone in the development of modern medicine.

Physics

The Royal Swedish Academy of Sciences has awarded The Nobel Prize in Physics for 2010 to Konstantin Novoselov and Andre Geim "for groundbreaking experiments regarding the two-dimensional material graphene".

Andre Geim and Konstantin Novoselov have shown that a thin flake of carbon, just one atom thick, has exceptional properties that originate from the remarkable world of quantum physics.

Graphene is a form of carbon. As a material it is completely new – not only the thinnest ever but also the strongest. As a conductor of electricity it performs as well as copper. As a conductor of heat it outperforms all other known materials. It is almost completely transparent, yet so dense that not even helium, the smallest gas atom, can pass through it. Carbon, the basis of all known life on earth, is full of surprises and has surprised us once again.

Chemistry

The Royal Swedish Academy of Sciences awarded The Nobel Prize in Chemistry 2010 to Akira Suzuki, Richard F. Heck and Ei-ichi Negishi "for palladium-catalyzed cross couplings in organic synthesis".

Organic chemistry has developed into an art form where scientists produce marvelous chemical creations in their test tubes. Mankind benefits from this in the form of medicines, ever-more precise electronics and advanced technological materials.

Akira Suzuki's, Richard F. Heck's and Ei-ichi Negishi's development of palladium-catalyzed cross coupling is a chemical tool that has vastly improved the possibilities for chemists to create sophisticated chemicals, for example carbon-based molecules as complex as those created by nature itself. Their discoveries are used in research worldwide, as well as in the commercial production of pharmaceuticals and molecules used in the electronics industry.

Peace

The Norwegian Nobel Committee has awarded The Nobel Peace Prize 2010 to Liu Xiaobo "for his long and non-violent struggle for fundamental human rights in China".

The Norwegian Nobel Committee has long believed that there is a close connection between human rights and peace. Such rights are a prerequisite for the "fraternity between nations" of which Alfred Nobel wrote in his will.

The Nobel Prize Award Ceremonies and Banquets will take place in Stockholm (Economy, Literature, Medicine, Physics and Chemistry) and Oslo (Peace) December 10th.