INTRODUCTION
Alfred Nobel, a Swedish citizen founded the Nobel Prize to award commendable human effort in the development of intellectualism, science, and global peace (Vento & Vezzani, 2019). Nobel was a successful industrialist who instructed his beneficiaries that his wealth was supposed to fund 5 prizes globally in commendation of outstanding intellectual composure in physics, chemistry, physiology, literature, medicine, and peace.
The Bank of Sweden also called the Sveriges Riksbank reward in memory of Nobel founded the prize for economics. The Nobel economics prize has been awarded to 94 individuals since 1969 to date. This article seeks to unearth some of the laureates, their history, and their significant contributions to the economic world that made them deserving beneficiaries of The Sveriges Riksbank Nobel awards.
History of the Nobel Economic Prize.
Alfred Nobel was a successful Swedish industrialist and entrepreneur. Nobel was an engineer by profession and also had a significant contribution to the engineering field by inventing dynamite (Doeff, 2019). His invention revolutionized the building, construction, and mining, industry since the dynamite was safer compared to other explosives that were used before. Dynamite was also used in advancing warfare in military science.in so far as the invention of the dynamite was good, Nobel was worried about the future misuse of his invention to exterminate populations as well as in advancing sophisticated global warfare. It is for this reason that Nobel decided to use his wealth to advance peace, philanthropy, and care for humanity. Nobel left a will stating that his wealth was supposed to be used to create the Nobel Prize to recognize and reward outstanding human effort in the fields of science, physics, chemistry, physiology, literature, medicine, and peace.
The Nobel Prize was officially founded by the Sveriges Riksbank in Sweden in 1969 and has helped in maintaining global peace, advancing breakthroughs in medicine, technology, and science as well as encouraging better human performance in various fields such as politics, climate conservation, and also in religion. The Royal Swedish Academy of Sciences is responsible for the nominations and selection of the laureates or the winners of the award. A thorough analysis of the substance of the history, contributions as well as impacts and significance of the candidate’s economic contributions are studied carefully by the academy (Lichtman, 2022). Some of the most recent and notable recipients of the economic award include David Card, Philip Dybvig, Douglas Diamond, Ben Bernanke, Guido Imbens, Joshua Angrist, Robert Wilson, and Paul Milgrom. These individuals have influenced economic policies or implemented significant economic action that has revolutionized the global perspective of economics.
Of keen interest is David Card, the 2021 winner of the Nobel economic prize award for his outstanding contribution to economics and labor markets (Ravindran, 2023). Card is an economist by profession and a professor of economics at the University of California. In advancing knowledge of labor markets, the card made a significant discovery of minimum wage. The card described minimum wage as the standard desirable minimum pay that workers in industrial and agricultural sectors should b pay for their skilled and semiskilled labor hourly. According to Card, many employees were underpaid by their employers owing to the lack of a standard basic pay or minimum wage. He also postulated that the lack of minimum wage brought unfairness and lack of equity between employers and employees leading to tendencies of discrimination, biasness, and unfair job allocation that is not commensurate to the remuneration. This in itself was against labor laws and other governing international codes of conduct requirements for employers.
Card postulate that there was a need for employers to increase and standardize the minimum wage to a reasonable figure to manage disgruntlement, and non-motivation amongst employees. The minimum wage was also pertinent in reducing continued attrition among employees and also continued labor mobility amongst employees since many employees fled from one job to another in search of better remuneration. Card termed nonstandardized wage rates the labor inequality that countries wishing for advanced industrialization and trade should stay away from. The minimum wage was creating uniformity amongst employers so that no employees would otherwise leave employment from one employer to another in search of better terms of payment. He argued that by adopting, the minimum wage, employers still had a responsibility of evaluating the market conditions, economic dynamics as well as other parameters of evaluating the economic performance to decide on the future values of the minimum wage since he considered the wage to be progressive and subject to change due to the precipitating economic situation of the country. His admission card stated that increasing the minimum wage has no diabolical effect on the number of jobs offered by employers in that it did not result in unemployment. This position contradicted the position of earlier economic theories that had cautioned that increasing the minimum wage would lead to substantive job loss. He did further qualitative and quantitative studies in the state of New Jersey to prove this fundamental labor theorem.
Card also did studies on the effects of immigration on wages and employment rates. Through a qualitative and quantitative analysis of Cuban immigrants through Mariel boatlift to the US city of Miami., card postulated that even though immigration led to an increase in population, it had no dire effects on the rates of employment and minimum wage. As anticipated by non-researchers, immigration led to an influx in labor markets thereby reducing the minimum wages, the converse was true. Immigration affected unskilled labor but was also inhibited by labor policies such as compliance requirements, language barriers as well as the primary supply of labor in the country of origin. Card opened Pandora’s box for further studies by other scholars who have immensely dissected the effects of immigration on labor and wages. Card reinforced the use of demand and supply as well as excess demand and supply on the prices of wages by employers and employees. The reduction in wage rates due to a sudden increase in population was so negligible to conclude that there was a direct consequence of the sudden influx of population on the wage rates. Cards theory on immigration informed the concept of free labor movement that is being adopted by most developed and developing countries to pool, labour supply. Countries such as Canada, and the USA have opened their doors for immigrants to come and offer labor in their countries since labor is a critical component of production.
The card also examined the effects of the advancement of knowledge, skills, and education on wage rates. Card postulated that higher educational and knowledge attainment led to a higher quality of labor and workforce thereby leading to higher wage rates (Goux & Maurin, 2023). Card termed the increase in the quality of labor to be a direct benefit to employers since it meant better output, more creativity, and innovativeness, faster methods of production, better decision-making leading to easier workflow, and appropriate feedback mechanisms. This challenged the existing status quo where only select employees were allowed to advance their education. The status quo supported traditional labor tendencies where decision-making was centralized, employees’ input in decision-making was unconsidered, and supervision was a critical component of labor management. Card advanced modern labor management that allowed employees to be key organs of the decision-making process and minimized supervision is enhanced since labor is informed, educated, and civilized enough to be autonomous and independent. Cards argued that labor is more productive if free and independent compared to when labor is uneducated, uninformed, and untrained.
Implications of David card’s economic contributions on labor.
Cards’ revelations compelled modern economists to reassess and evaluate existing economic theories and revamp them to capture his critical deductions. Apart from having significant contributions to academic theories about the labor, market David had the following implications for the labor market.
Cards
Free movement of labor.
By stating and proving that immigration and the sudden influx of population through emigration did not affect the wage rates, cards opened doors for free movement and mobility of labor. Different countries moved to adopt the use of work permits to allow free mobility of labor as this allowed an increase in the quality of; labor without the risk of interfering with the rate of wages. On the contrary, countries that allow free mobility of labor set foot for competitive wage rates thereby attracting the best labor quality globally. Countries such as Canada and us that allow for free mobility of labor have the best wage rates globally compared to countries that have maintained restrictive practices of labor.
Increased employment opportunities.
The free labor movement and mobility of labor as postulated by cards allowed employees to look for employers. This is contrary to the traditional labor tendencies where labor was domiciled in a region with employment opportunities. Labour was noncreative, un-experimenting to look for opportunities beyond the horizons of their countries. Card postulates a job matching process that allows employees to look for jobs beyond their countries of origin. By doing so there is a greater possibility of getting employed in the right job, with the right employer with better terms of employment compared to if labor sticks to its traditional tendencies of job seeking. Job matching also reduced the cost of training burden on employers since they found diverse labor with the right experience and skills unlike in the traditional market where they have to incur exorbitant costs in training employees to fit the desired
Skill development, upskilling, training, and reskilling.
Contrary to the traditional labor market cards theorem of labor explains an ever-advancing labor market where labor providers learn additional skills and expertise for more competitive wage rates and remuneration. Card postulates upward social mobility of labor that can only be attained through advancing education, acquiring additional skills and expertise, and also through experience. The labor market has adopted this and has increased opportunities for training and retraining of labor. Individuals train for more skills to increase their chances of getting employed and earning better remuneration and rewards. In case the skills available in the job market become redundant, employees will seek ways of reskilling and upskilling to fit the dynamic job market.
In conclusion, Alfred Nobel’s creation of the Nobel Prize for Economics was a noble invention that was meant to champion humanity through philanthropy, science, and technology advancement. The prize has created a competitive environment around intellectualism, science, and technology, and even in economic policy development and so are the deserving winners of this prize such as David Card. David Card contradicted the traditional labor market by postulating pertinent reforms that have changed the orientation of the labor market globally. He permitted the labor movement, introduced a minimum wage, and also intensified campaigns on training, educating, and reskilling labor to eliminate redundancy in the job market. Card challenged the status quo of traditional economists and economic theories such as Keynes’s theories also played critical roles in labor development. Labour had not grown rapidly intensively and optimally due to reliance on traditional theories that obstructed its growth. Because labor is a progressive and dynamic input of production, it is prudent that such economic conclusions such as that of cards be looked at keenly to advance effective growth and development of labor. The 2023 Nobel economic award for David Card was a well-deserved award for his immense contributions to changing the global approach of employees and employees in navigating the labor market.
References
Doeff, M. M. (2019). 2019 Nobel Prize iN Chemistry. 2019 NOBEL PRIZE, 8.
Vento, G., & Vezzani, P. (2019). Nobel Prize in Economic Sciences: The Role of Financial Studies. Frontier Topics in Banking: Investigating New Trends and Recent Developments in the Financial Industry, 3-41.
Ravindran, S. (2023). Profile of David Card. Proceedings of the National Academy of Sciences, 120(14), e2302599120.
Goux, D., & Maurin, É. (2023). David Card, Nobel Prize 2021: the Design-Based Revolution. Revue d’economie politique, (2), 25-46.
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