New Nobel Prize in Economics showed that raising the minimum wage is not

Canadian economist David Card, one of the three Nobel Prize laureates in Economics this Monday (11), demonstrated through empirical studies that increasing the minimum wage does not necessarily lead to an increase in unemployment.

Card was born in 1956 in Guelph, Canada, and is a professor of economics at the University of California, USA.

One of his main works, Myth and Measurement: The New Economics of the Minimun Wage [em português, “Mito e medição: a nova economia do salário mínimo”], signed with economist Alan Krueger, Card carries out a detailed investigation of the effects of the readjustment of the minimum wage on unemployment and poverty.

:: Unemployment rate is flat, informality grows and income plummets ::

The Nobel Prize winner focused his studies on young people and less-skilled workers. In the case of network workers fast food, for example, he demonstrated that the effect on job creation may be the opposite of what a conventional view might predict: the number of employees has increased, because young people who previously did not leave home to look for work were attracted by the general improvement in wages .

Card and Krueger’s conclusions refer to Brazil in the last decade, in which policies to increase the minimum wage coincided with years of reduction in poverty and unemployment levels. After the 2016 coup, when this policy was broken, unemployment soared, showing that the immediate cause-and-effect relationship between the two variables is much less intuitive than imagined by the authors of the 2017 labor reform text, for example.

:: In the favelas of RJ, 54% of respondents lost their formal jobs in the covid pandemic ::

In addition to Card, who received the award for his empirical contributions to the labor economy, the American Joshua D. Angrist and the Dutchman Guido W. Imbens were honored this Monday for their methodological contributions to the analysis of causal relations.

“Card’s studies on issues central to society and the methodological contributions of Angrist and Imbens have shown that natural experiments are a rich source of knowledge,” said Peter Fredriksson, chairman of the Swedish Academy’s Economic Science Award Committee.

Edition: Vivian Virissimo

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