David Card, former UChicago faculty member, wins 2021 Nobel Prize in economics

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University of California, Berkeley, economist and former assistant professor at the Graduate School of Business at UCHicago, David Card received a share of the Nobel Memorial Prize in Economics in early October for his contributions to labor economics.

The map is now among the 95 individuals associated with the University of Chicago to receive a Nobel Prize, including more than 30 economists. However, Card says his price came as a surprise. “To the best of my knowledge, most people don’t expect to win a Nobel Prize,” he said.

In an interview with Brown, Card described the moment he found out he had won the award as out of the ordinary. “It was two in the morning and the answering machine said there was a voicemail message from Sweden, which I thought was a joke at first. But then we realized it was a real Swedish number, and that was it, ”he said.

Card was in part surprised that his work is unique compared to other Nobel Prize winners. “I don’t do methodological research, and the awards in the past have been given to people who do economic theory, like Paul Samuelson,” Card said. Samuelson (AB ’35), on Nobel laureate in economics in 1970, is well known for his work on the efficient markets hypothesis.

While many of the Nobel Laureates in Economics have been praised for their methodological research or work in econometrics, Card’s work is primarily qualitative, dealing with controversial topics such as unemployment and strikes.

“People have the impression that [economics] is all inclusive, but it is anything but that, ”Card said of the public’s perception of the economy as an academic field. “I think it’s actually been a huge detriment to the pitch, that people think things are much more settled and our understanding is much deeper than they are. [is]. “

Card cited the job market as an example of a concept that is not fully accepted among economists. According to Card, a generally accepted view of how the job market works is that it works much like the stock market. “The standard model that people use in economics and in the labor market is like the stock market, where it’s not really nobody who sets the wages, it’s the market wage, just like there is. not a single player who sets the price of IBM shares. ”he said.

Card, however, prefers an alternative interpretation, whereby the labor market is like the gasoline market. Each employer has control over the price they pay for labor, just like “each individual store.” [can] set the price of gasoline, ”he said.

There are fundamental differences between these two models when you apply real scenarios to them and observe what happens. “If you raise the minimum wage in the first model, the market model, employers will reduce employment. In the second, they’ll actually increase employment, ”Card said.

Card enjoyed his time at UChicago and saw his connections there as fundamental to his subsequent work. “People taking an economics course should not be discouraged. The [are] many more opportunities for creative ideas than this first lesson will give you. What is important is to try to gain experience by working with a mentor who is actively engaged in the field, ”he said of his advice to economics students.

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