Nobel Prize for the Love of Work – The New Indian Express
With the rising tide of finance, studies of labor economics are out of fashion. Globalization and the expansion of multinational enterprises have reduced the power of labor. The International Labor Organization (ILO) is the only ranger fighting the tide. Fortunately, we have departments in some universities and economists who devote time to labor economics. Professor David Card, who this year received the Nobel Prize in economics, is one of them.
He has a stellar record as an academic. A Canadian citizen, he graduated from Queen’s University in 1978 and received a doctorate from Princeton in 1983. He taught at Princeton from 1983 to 1996 and held visiting positions at universities such as Columbia and Harvard. In awarding him the Jacob Mincer Prize in 2019, the committee declared that “he has been a major force and a leader in the field of labor economics for more than three decades”.
One might wonder why Professor Card chose labor economics as a career. He answered it in a December 2006 interview with the Federal Reserve Bank, Minnesota. He said he was more interested in the behavior of humans than that of derivative assets. Unlike finance, he found labor markets more exciting because they have “… information problems, rigidities and enormous heterogeneity …”. Naturally, his work “focused on how the labor market works for the least skilled or the least able”. He was keen to find out why some people succeed and why others fail and whether they are related to the environment, to institutions or to the people themselves.
He has applied these principles to his research for many years in areas such as education, inequality and immigration. His early work closely related to the minimum wage debates deserves special mention. All of these issues are politically and socially emotional or controversial. Card is not influenced by a priori or ideological perceptions. It relies on an unbiased analysis of empirical data, their trends and their correlation or causation before reaching a conclusion. It is indeed this approach that impressed the Nobel Committee which awarded him the prize.
Card is a prolific writer and has contributed over 100 journal articles and book chapters. He was Director of the Social Studies Program at the National Bureau of Economic Research (NBER) from 2012 to 2017. He has several books to his credit and the Myth and Measure: The New Economy of Minimum Wage (1995) created waves. He has given prestigious lectures on his work. It is not practical to cover all of your contributions. We take a few selectively.
America was a paradise for migrants from Europe and other parts of the world. The flow of people who escaped Nazi tyranny in the 2 years leading up to WWII is well recorded and celebrated. Unfortunately, in recent years there has been a backlash against immigrants there. America is now deeply polarized between those who favor migration and those who oppose it. The election of Donald Trump as President of the United States was the culmination of the anti-immigration malaise. Debates over immigration policy continue and are heated. Card has been steadfast in his support for immigration. He believes that the arguments against immigration are unfounded or untenable and that those who oppose it, even economists, “are motivated by concerns outside the narrow realm of economics.” He is optimistic about the impact of immigration on US labor markets, which are remarkably able to adapt to the changing composition of the local workforce. They are also absorbed quickly and easily. In addition, his research on the impact of immigration on wages indicated that any reduction “is on the order of a few percent nationwide over 25 years.” Likewise, in his Ely lecture on immigration and inequality (2009), he explained that âimmigration has not had much effect on indigenous inequalityâ.
On the issue of the minimum wage, he held firm to the chagrin of hoteliers and retail chain owners. He advocates a higher minimum wage for unskilled workers. His research survey covered most American cities. He established that “job losses associated with a modest increase in minimum wages are difficult to detect”. Subsequent studies by other economists also confirmed this view.
Nobel Prize winners in economics have tended to favor economists who work in exotic, esoteric, algorithm-based fields that seem far removed from the reality and demands of the present day. By awarding this year’s prize to Card, the Nobel Committee has moved away from this trend. For the economist, it is a reward for the love of work.
Served at the Ministry of Finance, GOI, and retired as Deputy Secretary