The search approach to labor economics allows a productive interaction between economic theory and applied work because it incorporates uncertainty about the economic environment from the outset of the analysis. Optimal decisions derived in the search framework take account of market opportunities and market uncertainties, as well as considerations of costs of search or the “value of nonmarket time.” In this sense, search models represent a sharp break with conventional practice in empirical modeling of employment and labor force participation. Because these models are explicitly stochastic, the distinction in tone between theoretical arguments and econometric and empirical arguments is much less pronounced than is usually the case. Indeed, theory and econometrics can be made to blend quite smoothly.

The chapters in this volume represent our work in labor economics, in the search framework, over roughly the decade 1977–87. We began our work at the University of Chicago, and the effort continued at the Center for Operations Research and Econometrics (CORE), University of Louvain, and Cornell (NMK), and at Northwestern and Iowa (GRN). Over the years we have received many useful comments and suggestions from teachers, colleagues, and students, including Gary Becker, Ken Burdett, Hyun Joon Chang, Theresa Devine, Ron Ehrenberg, James Heckman, Tony Lancaster, Ed Lazear, Steve Lippman, Bob Lucas, Shelly Lundberg, John McCall, Lars Muus, Melvin Reder, Geert Ridder, Sherwin Rosen, Sunil Sharma, Robert Topel, and Neils Westergaard-Neilsen.