Text: Lu (Economics Researcher, Research Institute, Ph.D. in Economics, National Taiwan University) David Card, Joshua Angrist, Guido won this year's Nobel Prize in Economics, bringing Empirical Economics/Labor One of the most notable is the minimum wage study published by David Card and Alan Krueger in the 1990s. They used a quasi-experiment to define the experimental group in New Jersey, which has a minimum wage increase, and the neighboring Pennsylvania, which has no minimum wage increase, as a control group. Changes in employment after the Western State minimum wage hike.
It found that there was no evidence that the minimum wage hike caused a significant decline in employment in New Jersey, and that employment may even grow. Model Reasoning for Efficient Markets The study shocked mainstream economics' claims about efficient markets at the time, and was the starting point of the minimum wage debate that followed for decades. In fact, there are two levels of confrontation here: first, economic theory vs. empirical research; second, efficient vs. inefficient markets. Since economic theory is often based on simpler sms services assumptions about efficient markets, these two levels of confrontation are often combined: model reasoning for efficient markets vs. actual validation of inefficient markets. Traditional mainstream economics is deeply influenced by neoclassical economics and believes that the free market can achieve complete competitive efficiency and the government should not interfere.
The assumption of a perfectly competitive market is that both buyers and sellers in the market have complete information and are both recipients of the equilibrium price in the market, without any bargaining power. Under this assumption, the supply and demand sides will reach equilibrium price and quantity, and maximize efficiency. Any intervention in price and quantity will only make the market deviate from efficiency. In terms of the labor market, "labor demand" reflects the market value that an employer can obtain for each additional worker hired by an employer; "labor supply" reflects the compensation required for each additional unit of labor provided by a worker. Under the assumption of a perfectly competitive market, the supply and demand sides agree to reach an equilibrium wage.