Nobel Prize for Economics 2021

Nobel Prize for Economics 2021

Subject – Economy

Context – Nobel Prize for economics goes to 3 US-based economists

Concept –

• Three US-based economists won the 2021 Nobel prize for economics for pioneering research on the labour market impact of minimum wage, immigration and education, and for creating the scientific framework to allow conclusions to be drawn from such studies that can’t use traditional methodology.
• Canadian-born David Card of the University of California at Berkeley was awarded one half of the prize, while the other half was shared by Joshua Angrist from the Massachusetts Institute of Technology and Dutch born Guido Imbens, 58, from Stanford University.
• Card worked on research that used restaurants in New Jersey and in eastern Pennsylvania to measure the effects of increasing the minimum wage.
  • He and his late research partner Alan Krueger found that an increase in the hourly minimum wage did not affect employment, challenging conventional wisdom, which held that an increase in minimum wage will lead to less hiring.
  • Card’s work also challenged another commonly held idea that immigrants depress wages for native-born workers. He found that incomes of the native-born can benefit from new immigration, while it is earlier immigrants who are at risk of being negatively affected.
• Angrist and Imbens won their half of the award for working out the methodological issues that enable economists to draw solid conclusions about cause and effect even where they cannot carry out studies according to strict scientific methods.
• Unlike the other Nobel prizes, the economics award wasn’t established in the will of Alfred Nobel, but by the Swedish central bank in his memory in 1968, with the first winner selected a year later.