In 19 92, a landmark study based on such an experiment changed the face of economics forever. A ten % increase in the minimum wage reduced teen employment rates by one to three%. In fact, between 19 81 and 19 90, the minimum wage remain fixed at three point three five dollars per hour. And yet teenage employment rates hardly changed, even though the relative value of three point 3 5 dollars diminished overtime. The higher price will dissuade customers from buying said products, and the firm will ultimately let go of low skilled employees to remain comparative. It hurts the very same people it is expected to empower.
The winners for the the Nobel Prize in Economics for this year are…*drumroll*…US-based economists David Card, Joshua D. Angrist and Guido W. Imbens.
In today's episode for 13th October 2021, we’ll focus on David Card’s work today and hopefully talk about the other two tomorrow. And with that introduction out of the way, let’s get to the story, shall we?