Economics Nobel analyzing job market—not entirely “news”

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The Royal Swedish Academy of Sciences has awarded 3 economists–Peter Diamond, Dale Mortensen and Christopher Pissarides–the Nobel Prize for their work analyzing deviations from classical theories of how job markets work–namely, that prices set at the optimum such that markets clear, that is, employers and employees find each other and deal.

I lack preparedness to judge the work’s analytics but the conclusions are longstandingly apparent to some job market actors–and disproportionately clear to certain demographics. As examples:

  • African American physicians of a certain generation who were denied work. The mere existence of a demand for their board certified services and their available labor wasn’t determinant in their securing employment, garnering hospital admission privileges or supporting a lone practice.
  • Highly trained female lawyers like Sandra Day O’Connor and Ruth Bader Ginsberg for whom opportunity to become  judge was flatly foreclosed at their career’s outset and extensively thereafter.
  • Extracontinentally, geographic barriers to entry for immigrant groups of relatively equal poverty and initiative but unequal remoteness from the U.S. labor market–for example, Mexico or Cuba vs. South Africa or India.

In fact, the sheer number and diversity of exactly these factors may suggest that they should instead define any classical theory for job market clearing vs. being declared “friction” or exogenous factors in some unencumbered dynamic.  The social and cultural inflections of where different demographics physically enjoy freedom of movement and tacit permission to shop (the location of the demander) has determined as much of some businesses’ success over history as have many of their outright products and services, or operational merit.  In reverse, the real estate valuation mantra “location, location, location” in relation to a firm (the location of the supplier) famously captures just that.  While both circumstances clearly drive supply and demand neither is material to the innate talent profile of a worker or the job requirements of an employer. Real supply and demand are incorporative of, vs. obscured by, cultural and social contexts.

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