Nobel Prize in Economics 2021 – Solving the Bigger Problems

 

The world has witnessed the movements like #BlackLivesMatter, #MeToo but one movement which is always going on in every part of the world is Immigrants Live Matter too.

Not only in developed countries like UK or USA but also in the developing countries like India, people in the big metropolitan cities do not like or do not treat equally to someone who comes from the remote part of the country. The feeling of superiority of being from one of the big cities or maybe that’s a feeling of insecurity Whatever it is but Immigrants Lives Do Matter no matter what part of world your in. And everyone has a right to live with respect and dignity.

It is a common and old believe that Immigrants steal the jobs or employment of locals. I personally experienced this not only in Pune but also in London. No matter how skilled the worker or employee is local have this strong believe that he/she is taking their employment opportunities.

2021 Nobel prize in Economics broke this status quo. The Nobel prize was given to three Economist from America – David Card, Joshua Angrist and Guido Imbens.

These three Nobel Laureates tried to answer our daily life problems. Many questions in Social Science which deal with cause & effect are answered by these three Nobel Laureates.

Natural experiments help answer to important questions to the society, we now got answers to the following questions -  

1. How does immigration affect pay and employment levels?   

2. How does a longer education affect someone’s future income?

These questions are hard to answer because we do not have anything to use as a comparison.

These three American Nobel Laureates won the Nobel Prize in Economic Science.

The Nobel committee awarded half prize to David Card for his empirical contributions to the Labour Economics. The other half of the prize is jointly given to the Joshua Angrist and Guido Imbens for their methodological contributions to the analysis of Causal Relationships.

Using natural experiments, David Card has analyzed the labour market effects of minimum wages, immigration and education. His studies from the early 1990s showed, among other things, that increasing the minimum wage does not necessarily lead to fewer jobs.

We now know that the incomes of people who were born in a country can benefit from new immigrants, while people who immigrated at an earlier time risk being negatively affected.

We have also realized that resources in schools are far more important for student’s future labour market success than was previously thought. Data from a natural experiment is difficult to interpret, however.

For example, extending compulsory education by a year for one group of students (but not another) will not affect everyone in that group in the same way.

In the mid – 1990s, Joshua Angrist and Guido Imbens solved methodological problem, demonstrating how precise conclusions about cause & effect can be drawn from natural experiments.

Card’s studies of core questions for society and Angrist and Imbens’ methodological contributions have shown that natural experiments are a rich source of knowledge.

The research of these three Nobel laureates has substantially improves our ability to answer key causal questions, which has been of great benefit to society.