Matching Theory
More recently, job search, and other types of search, have been incorporated into macroeconomic models, using a framework called 'matching theory'. Peter A. Diamond, Dale Mortensen, and Christopher A. Pissarides won the 2010 Nobel prize in economics for their work on matching theory.
In models of matching in the labor market, two types of search interact. That is, the rate at which new jobs are formed is assumed to depend both on workers' search decisions, and on firms' decisions to open job vacancies. While some matching models include a distribution of different wages, others are simplified by ignoring wage differences, and just imply that workers pass through an unemployment spell of random length before beginning work.
Read more about this topic: Search Theory
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“The great tragedy of science—the slaying of a beautiful theory by an ugly fact.”
—Thomas Henry Huxley (1825–1895)