Overview

"An equilibrium theory of unemployment assumes that firms and workers maximize their payoffs under rational expectations and that wages are determined to exploit the private gains from trade. This book focuses on the modelling of the transitions in and out of unemployment, given the stochastic processes that break up jobs and lead to the formation of new jobs, and on the implications of this approach for macroeconomic equilibrium and for the efficiency of the labour market. This approach to labour market equilibrium and unemployment has been successful in explaining the determinants of the ""natural"" rate of unemployment and new data on job and worker flows, in modelling the labour market in equilibrium business cycle and growth models, and in analyzing welfare policy. The second edition contains two new chapters, one on endogenous job destruction and one on search on the job and job-to-job quitting. The rest of the book has been extensively rewritten and, in several cases, simplified."

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9780262161879

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Christopher A. Pissarides is Professor of Economics at the London School of Economics and a Research Associate at the National Bureau of Economic Research. He received the 2010 Nobel Prize in Economics.

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