Nobel prize in economics 2010 and labor markets

This year´s nobel prize in economics was awarded to professors Diamond, Mortensen and Pissarides, for their analysis of markets with search frictions, known as search theory. This approach addresses many issues, including the following: Why do workers sometimes choose to remain unemployed? What determines the lengths of employment and unemployment spells? How can there simultaneously exist unemployed workers and unfilled vacancies? What determines aggregate unemployment and vacancies? How can homogeneous workers earn different wages? What are the trade- offs firms face from different wages? How do wages and turnover interact? What determines efficient turnover? An excellent survey of the theory can be read here.