The new Nobel Prize in Economics has shown that an increase in the minimum wage does not mean an increase in unemployment

David Card’s conclusions point to Brazil in the past decade, where policies to increase the minimum wage have coincided with years of low levels of poverty and unemployment.
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Written by Daniel Giovannaz, Brazil de Facto Canadian economist David Card, One of three Nobel Prize winners in economics This Monday (11), which has been proven by empirical studies that raising the minimum wage does not necessarily lead to unemployment growth.

Card was born in 1956 in Guelph, Canada, and is Professor of Economics at the University of California, USA.

Among his most important works, Myth and Measurement: The New Economics of the Minimum Wage [em português, “Mito e medição: a nova economia do salário mínimo”]Card, signed with economist Alan Krueger, does a detailed investigation of the effects of the minimum wage adjustment on unemployment and poverty. The Nobel Prize winner focused his studies on young people and workers with less qualifications. In the case of network workers Fast foodHe argued, for example, that the effect on job creation might be the opposite of what the conventional view might expect: the number of employees increased, because young people who had not previously left home to look for work were drawn to the general improvement in wages.

Card and Krueger’s conclusions point to Brazil in the past decade, where policies to increase minimum wages have coincided with years of low levels of poverty and unemployment. After the 2016 coup, when this policy was broken, unemployment rates rose, showing that the direct cause-and-effect relationship between the two variables is far less intuitive than what the authors of the 2017 labor reform text, for example, had imagined.

In addition to Card, who received the award for his empirical contributions to the labor economy, American Joshua D.

“Card studies on central issues of society and the methodological contributions of Angrist and Imbens have shown that natural experiments are a rich source of knowledge,” said Peter Fredriksson, chair of the Economic Sciences Prize Committee at the Swedish Academy.

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