Nobel Economics Prize on Minimum Wage - October 2021
David Card, Joshua Angrist and Guido Imbens have been awarded the Nobel Prize for Economics in 2021 for their work on minimum wage that ‘challenged conventional wisdom’. Whilst economic model offers a basis for understanding theory, economists are not able to run experiments to test their theories but rather depend on the examination of real life situations.
Opposing the notion that increases in minimum wage always led to falls in employment, their work surveyed restaurants in New Kersey before and after the introduction of the minimum wage in 1992 where their findings revealed that the minimum wage had not led to significant job losses in the fast-food industry. Contrary to previous thought, Card found that employment in New Jersey restaurants increased after the minimum wage was raised. Furthermore, in another unique experiment, Card studied how 125,000 Cubans arriving in Miami during the 1980s raised the size of the workforce by 7% but found no deleterious effects on jobs or wages of low-paid workers as a result of the migration. Card’s work offers a counterargument to UK government officials in keeping wages low and impacts on migration policymaking.