Dale T. Mortensen, a professor of economics at Northwestern University, pioneered an approach to studying labor markets that led to a better understanding of unemployment.
His research was aimed at answering questions like why people can be unemployed for long periods of time when there are jobs available. The work earned Mr. Mortensen and two colleagues the Nobel Memorial Prize in Economic Sciences in 2010.
Mr. Mortensen, 74, died Thursday, Jan. 9, at his home in Wilmette, according to his son, Karl. An exact cause had not been determined but he had been battling cancer, his son said.
Mr. Mortensen's colleagues and former students said the approach he developed was revolutionary because it gave economists and policymakers a way to study market anomalies that defy the traditional supply and demand model.
"He provided a theory that people could work with," said Rasmus Lentz, an associate professor of economics at the University of Wisconsin at Madison a former student of Mr. Mortensen's who co-wrote papers with him.
The theory was based on the idea that "market frictions," or the time and effort required to complete a transaction, can make for imperfect competition in a market.
"Before Dale, common explanations for unemployment were that the minimum wage was too high or unemployment benefits were too generous," said Kenneth Burdett, a professor of economics at the University of Pennsylvania who was a student of Mr. Mortensen's. "Dale raised the idea that there were market frictions and unemployment could come out as a natural equilibrium phenomena."
Born Feb. 2, 1939, in Enterprise, Ore., to a father who was a forest ranger and a mother, who was from Denmark, Mr. Mortensen developed an early love of the outdoors. He studied economics at Willamette University in Salem, Ore., where he received a bachelor's degree before receiving a Ph.D. from Carnegie Mellon University of Pittsburgh.
He taught at Northwestern for nearly 50 years, joining the faculty in 1965. From 2006 to 2010, he also taught at the School of Economics and Management at Aarhus University in Denmark, where he was the Niels Bohr visiting professor.
It was during lunch with a colleague in Denmark in 2010 that Mr. Mortensen got word that he and fellow economists Peter Diamond of the Massachusetts Institute of Technology and Christopher Pissarides of the London School of Economics and Political Science had won the Nobel Prize.
The three men are responsible for what's known as the Diamond-Mortensen-Pissarides model, a widely used tool that allows economists to estimate how unemployment benefits, interest rates and other factors can affect the labor market.
The Royal Swedish Academy of Sciences, which selects Nobel Prize winners, said the models by the three economists "help us understand the ways in which unemployment, job vacancies and wages are affected by regulation and economic policy."
Mr. Mortensen was the first Northwestern professor to win the Nobel Prize for economics. He shared the $1.5 million award with Diamond and Pissarides.
Mr. Mortensen's work "was truly groundbreaking," said Daniel Sullivan, director of research at the Federal Reserve Bank of Chicago.
"It spawned a large body of research by Dale and others, and has provided Federal Reserve policymakers with a highly useful framework for thinking about unemployment and the appropriate course for monetary policy," Sullivan said. "His insights and good humor will be sorely missed."
In his years at Northwestern, Mr. Mortensen developed lasting relationships with students who later became colleagues and lifelong friends.
"He was just a good man," Burdett said. "He was quiet, thoughtful, and could be funny. And very much a family man."
Mr. Mortensen was a music lover and sang for years in a choir directed by his wife, Beverly, who is also on the faculty at Northwestern and is a scholar of ancient Judaism and contemporary religious thought. The couple celebrated their 50th anniversary last summer.
"He loved the outdoors," said Karl Mortensen. "He had a good feeling and appreciation for what's out there beyond the walls of the house."
Mr. Mortensen also is survived by two daughters, Lia and Julie Glanville; and eight grandchildren.
Services will be private. A public memorial will be announced later.