UC Berkeley’s David Card wins 2021 Nobel Prize in economics

David Card, a labor economist and professor of economics at UC Berkeley, has won the 2021 Nobel Memorial Prize in Economic Sciences.

David Card speaks to the press during his Nobel Prize press conference at UC Berkeley’s campus in Berkeley on Monday, Oct. 11, 2021. Card was awarded the Nobel Prize in Economics by the Nobel Committee for his work in labor economics. Credit: UC Berkeley

David Card, a labor economist and professor of economics at UC Berkeley, has won the 2021 Nobel Memorial Prize in Economic Sciences for work that challenged orthodoxy and dramatically shifted understanding of inequality and the social and economic forces that impact low-wage workers. He was awarded half the prize, with the other half shared by economists Joshua Angrist of MIT and Guido Imbens of Stanford University.

Card is best known for pioneering studies in the 1990s that remain acutely relevant today, as they questioned the prevailing assumptions about the impact of immigration on native-born U.S. workers and the effect of minimum wage increases on domestic job growth.

Card, 65, a native of Ontario, Canada, is UC Berkeley’s sixth economist to win the Nobel Prize in economics and the campus’s 26th Nobel laureate overall. His predecessors are Oliver Williamson, (2009), George Akerlof (2001), Daniel McFadden (2000), John Harsanyi (1994) and Gérard Debreu (1983).

Announcing the award today in Stockholm, Sweden, the Economic Sciences Prize Committee at the Royal Swedish Academy of Sciences credited Card for his impact on policy debates over immigration, welfare reform and inequality.

Card’s work “helped to answer important questions for society,” said Peter Fredriksson, chair of the committee at a news conference in Sweden. Card’s work, he added, “challenged conventional wisdom, which led to new studies and additional insights.”

Taken together, the work by the three economists “revolutionized empirical work” in economics, the committee said.

Card learned of the award early Monday morning at his family’s home in Santa Rosa — and thought it was a practical joke being played by mischievous colleagues. He had just arrived after a day of travel from a family event near, Guelph, Ontario, in Canada. The initial call from the Nobel committee came to his family’s home in Berkeley, and a voice message was forwarded to Santa Rosa.

“The message said the call was coming from Sweden,” he said just after winning the award. “I have a couple of friends who would pull a stunt like that.”

He welcomed the news with a self-effacing assessment of his work and its impact.

“My contributions are pretty modest,” he said. “It’s about trying to get more scientific tie-in and evidence-based analysis in economics.

“Most old-fashioned economists are very theoretical, but these days, a large fraction of economics is really very nuts-and-bolts, looking at subjects like education or health, or at the effects of immigration or the effects of wage policies. These are really very, very simple things. So, my big contribution was to oversimplify the field.”

And in the process to make it more useful in application?

“Well, that was my belief, but you would probably get a mixed vote on that.”

This is the second year in a row for UC Berkeley faculty to win a Nobel Prize. Last year, Jennifer Doudna was awarded the Nobel Prize in Chemistry, and Richard Genzel won the Nobel Prize in Physics.

UC Berkeley’s Class of 1950 Professor of Economics, Card has co-authored and edited several books and more than 100 journal articles and book chapters. He directs UC Berkeley’s Center for Labor Economics, the campus’s Econometrics Laboratory and previously served as director of the National Bureau of Economic Research’s Labor Studies Program.

In 1995, Card received the John Bates Clark Medal, awarded annually to an American economist under 40 who is judged to have made the most significant contribution to economic thought and knowledge. It is widely viewed as a precursor to a Nobel Prize.

He currently serves as president of the American Economic Association.

The minimum wage: a challenge to orthodoxy

Starting in the early 1990s, Card teamed up with Princeton University economist Alan Krueger on path-breaking research on the minimum wage. Krueger eventually chaired President Barack Obama’s Council of Economic Advisers before his death in 2019. Writing on the minimum wage, they posed a challenge to the economic orthodoxy that had prevailed for decades.

In a 1993 paper, they found that a 1992 minimum wage increase in New Jersey did not hurt — and may have actually boosted — job growth at fast-food restaurants that were the focus of his study.

In their book Myth and Measurement: The New Economics of the Minimum Wage (1995), the authors extended and deepened their exploration of the issue. The book generated considerable controversy, but as time passed, its conclusions were widely accepted, and it continues to have broad influence on policymakers and policy in local, state and federal government.

“Much of my work has focused on how the labor market works for lower-skilled or less-abled people,” Card said in a 2006 interview with a Federal Reserve Bank publication. He added that he was motivated to “understand why some people succeed and others fail, and how their success or failure is related to the environment, institutions and the people themselves.”

Is immigration really an economic burden?

In a 1990 study frequently referenced in immigration debates, Card found that the mass influx of Cuban refugees from the 1980 Mariel boatlift had a minimal impact on Miami’s job market, perhaps due to the city’s successful absorption of two major waves of immigrants two decades earlier.

And in a 2005 paper, “Is the New Immigration Really So Bad?” he concluded that few of the immigrants who come to the United States without completing high school are likely to have average earnings that equal those of native-born residents. Even so, he posited, the immigrants’ U.S.-born children eventually earn enough to make up for their parents’ lack of earning power.

An abundance of honors

Card started undergraduate studies at Queen’s University in Ontario as a physicist, but switched to labor economics, a field he considered more practical. He earned his bachelor’s degree in 1978, followed by a Ph.D. in economics from Princeton in 1983.

Card joined UC Berkeley’s economics faculty in 1998 after teaching at Princeton, Harvard University and the University of Chicago. That same year, he was elected to the American Academy of Arts and Sciences.

In 2006, Card and Krueger received the prestigious IZA Prize in Labor Economics from the Institute of Labor Economics in Bonn, Germany. A year later, Card was awarded the international Econometric Society’s Frisch Medal, considered one of economics’ top three honors.

In 2013, Card was named the John Kenneth Galbraith Fellow by the American Academy of Political and Social Science.  He was elected president of the Western Economic Association International from 2014 to 2015 and served as vice president of the American Economic Association that same year.

In more recent years, Card’s research has looked into such diverse questions as how knowing a co-worker’s salary affects the person’s sense of job satisfaction, the connection between football game results and domestic violence, and the underrepresentation of low-income and minority students in gifted education programs in the United States.

In 2019, as an expert witness in a federal case against Harvard’s admissions process, he testified in support of the university’s race-conscious approach to screening applicants, disputing claims of a penalty against Asian American students.

Card, Angrist and Imbens will share a prize of 10 million Swedish krona, or nearly $1.2 million.