Good news from the world of the dismal science. A Canadian boy, David Card, has won a share of the 2021 Nobel Prize in Economics. Nice to see one of our own win the big prize, and particularly nice when one considers why he won it. Pioneering research by Card and Alan Krueger showed that an increase in minimum wage does not lead to less hiring. Their work fundamentally altered the view that many economists had assumed for years, almost without questioning, that minimum wages destroyed jobs.

Furthermore, their research was based not on theory or models but on real-world behaviour. They examined the effect on hundreds of fast-food restaurants in New Jersey and Pennsylvania when minimum wages were raised in one state but not the other. A natural experiment, so to speak. Further studies have confirmed their results. According to economist Paul Krugman writing in the New York Times, their “results make the case not just for higher minimum wages, but for more aggressive attempts to reduce inequality in general.”

While Card and Krueger’s work showed the fallacy of linking higher minimum wages to less hiring, the fallacy persists among certain politicians. Doug Ford’s Progressive Conservatives and Jason Kenney’s UCP come to mind. Again referring to Krugman, “the political use of economic theory has tended to have a right-wing bias,” while “evidence turns out to have a liberal bias.”

David Card currently teaches at the University of California, Berkeley, where he has received an even perhaps rarer honour. In recognition of his Nobel, the university has awarded him a parking space near his office. I congratulate Professor Card on his prize … and on his parking space.

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