The Nobel prize for economics was awarded on Monday to U.S.-based economist David Card for pioneering research that showed an increase in minimum wage does not lead to less hiring and that immigrants do not lower pay for native-born workers, challenging commonly held ideas. The prize was shared with two others for creating a way to study these types of societal issues.
Canadian-born Dr. Card of the University of California, Berkeley, was awarded one half of the prize for his research on how minimum wage, immigration and education affect the labour market, while the other half was shared by Joshua Angrist from the Massachusetts Institute of Technology and Dutch-born Guido Imbens from Stanford University for their framework for studying issues that can't rely on traditional scientific methods.
The Royal Swedish Academy of Sciences said the three have “completely reshaped empirical work in the economic sciences.” Together, the three helped rapidly expand the use of “natural experiments”, or studies based on the observation of real-world data. Such research made economics more applicable to everyday life, provided policymakers with actual evidence on the outcomes of policies, and in time spawned a more popular approach to economics epitomised by the bestseller Freakonomics by Stephen Dubner and Steven Levitt.
In a study published in 1993, Dr. Card looked at what happened to jobs at fast-food restaurants Burger King, KFC, Wendy’s and Roy Rogers when N.J. raised its minimum wage from $4.25 to $5.05, using restaurants in bordering eastern Pennsylvania as the control — or comparison — group. Contrary to previous studies, he and his research partner Alan Krueger, who died in 2019, found that an increase in the minimum wage had no effect on the number of employees.
Dr. Card’s minimum wage research fundamentally altered economists’ views of such policies.
As noted by the Economist magazine, in 1992 a survey of the American Economic Association’s members found that 79% agreed that a minimum wage law increased unemployment among younger and lower-skilled workers.