So, what exactly did Card study? In fact, his research is very relevant to you and me. He confirmed that the minimum wage law is very helpful to the economy.
Western economists have always been puzzled by the fact that why do western countries enter a round of economic crisis every few years? There are many schools of answers to this question, but one of the relatively popular views is the explanation of labor economics.
Because of economic growth, the free market will be more inclined to distribute dividends to the capital side, that is to say, the profit of the enterprise flows more to capitalists and shareholders rather than laborers. In the end, this made the income and consumption of the broad working class unable to support the growing economy and prices, and finally triggered an economic crisis.
Take the United States as an example. In the past 40 years of economic growth, workers’ wages have grown far less than economic growth. This may be the most fundamental reason for the continuous economic crisis in the United States.
One way to solve this problem is to establish a minimum wage law. China is relying on this method to achieve a balanced distribution of income, so that China’s economic development is relatively continuous.
However, this approach has caused controversy in the economics community. For example, Chinese economist Zhang Wuchang raised objections, arguing that the minimum wage law will reduce the willingness of enterprises to hire workers and ultimately affect the job market.
So how to falsify such an objection is a very difficult thing. Fortunately, Card designed a very perfect empirical economic experiment.
Through this experiment, Card proved that the establishment of minimum wage restrictions, not only did not damage the employment of low-income groups, but also raised the wages of low-income groups, and indirectly increased the minimum wage. The salary of people with income above the wage line is a powerful measure that is conducive to rebalancing the economic distribution and in turn driving economic growth.
The 2021 Nobel Prize in Economics awarded to Card also proves that Card's research is a real achievement that is really conducive to human economic theory and social development.
But for capitalist countries that advocate a free economy, does this theory really work for them?
Western economists still admire trickle economics most, hoping to help the overall economic growth through social distribution more inclined to the rich, but through these many years of practice, we know that the final result of trickle economics is only to make the rich Richer, poorer people, the wealth of the top 1% of the rich class in the United States far exceeds the sum of the wealth held by the middle class.
After the Biden administration took office, it appointed and Yellen , an expert in labor distribution, hoping to rebalance the income distribution in the United States through tax increases, but even tax increases are difficult. Passed between the two parties in the United States.
And you must know that most Western economists serve organizations that receive donations and funds directly from the rich. If these organizations are to achieve results that are beneficial to the poor, I am afraid that they are looking for the skin of the tiger.
The country that can truly practice Carder's theory and implement the minimum wage law may only be a country like China, so that it can truly protect the interests of the civilian class and achieve common prosperity for all.
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