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The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 2021 was given to three economists for two groundbreaking works using ‘natural experiments’.
David Card won half of the prize “for his empirical contributions to labour economics” and the other half went to Joshua D Angrist and Guido W Imbens “for their methodological contributions to the analysis of causal relationships”.
Their approach has revolutionised empirical research, according to the Nobel committee, which said:
This year’s Laureates have provided us with new insights about the labour market and shown what conclusions about cause and effect can be drawn from natural experiments.
Card, a professor of economics at the University of California in Berkeley, has analysed how minimum wages, immigration and education impact the labour market. One of the significant findings of this research was that “increasing the minimum wage does not necessarily lead to fewer jobs”.
Card’s work also led to the understanding that “people who were born in a country can benefit from new immigration, while people who immigrated at an earlier time risk being negatively affected”.
It also illuminated the role of resources available in school in shaping the future of students in the labour market, the committee highlighted.
Angrist teaches at the Massachusetts Institute of Technology, Cambridge and Imbens at Stanford University. They were rewarded for their “methodological contributions” to the research tool.
Their work demonstrated “how precise conclusions about cause and effect can be drawn from natural experiments”, the Nobel panel said.
David Card was born in Canada, Joshua D Angrist in the US and Guido W Imbens in the Netherlands. Card received 5 million Swedish krona (Rs 4.3 crore) and an equal amount was split between Angrist and Imbens.
The prize given by the Royal Swedish Academy of Sciences was awarded to Paul R Milgrom and Robert B Wilson “for improvements to auction theory and inventions of new auction formats” in 2020.
The award was established in 1968 by Sveriges Riksbank (Sweden’s central bank) established the Prize in memory of Alfred Nobel.