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FROM ONE TO MANY ISLANDS: THE EMERGENCE OF SEARCH AND MATCHING MODELS
Author(s) -
Batyra Anna,
De Vroey Michel
Publication year - 2012
Publication title -
bulletin of economic research
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.227
H-Index - 29
eISSN - 1467-8586
pISSN - 0307-3378
DOI - 10.1111/j.1467-8586.2010.00389.x
Subject(s) - pigou effect , economics , unemployment , matching (statistics) , keynesian economics , full employment , neoclassical economics , underpinning , macroeconomics , statistics , civil engineering , mathematics , engineering
The notion of frictional unemployment failed to grow into a full‐fledged theory in the writings of Beveridge, Pigou and Hicks, as these economists were unwilling and/or unable to go beyond the then‐prevailing Marshallian approach. Here, first we make explicit the trade organization assumptions underpinning Marshall's equilibrium theory. Next we examine Beveridge's, Pigou's and Hicks' early works on wages and unemployment. Finally, we look at the seminal papers that paved the way for search literature: McCall, Lucas and Prescott, Mortensen and Pissarides. We show that they succeed in providing an unemployment result, because they indeed depart from the Marshallian trade organization.