Krugman on the research behind this year's Economics Nobel, and why it's relevant

This posting is actually from a few days ago, but it's too good not to use.

So, this line of research concerns the fact that many markets, and above all the labor market, don’t fit the classic supply-and-demand paradigm, in which prices quickly rise or fall so as to ensure that everyone who wants to buy finds someone willing to sell and vice versa. Instead, the labor market, or the housing market, is one in which heterogeneous sellers confront heterogeneous buyers, and it takes time and effort to find appropriate matches. That’s why the unemployment rate isn’t zero at “full employment”; it’s why structural unemployment is an issue.