On October 24, the Círculo Ecuestre held a colloquium featuring David Card, Nobel Prize winner in Economics in 2021.
After the welcome address by the president of the Círculo Ecuestre, Enrique Lacalle, and the presentation by the graduate in Political Science from the University of California at Berkeley and member of the club, Manuel García, the economist held a dialogue with the Deputy Director of El Periódico, Gemma Martínez.
During his speech, Card explained that, in the last 30 years, there has been a shift in economics, particularly in microeconomics, towards what he called "evidence-based policy." "When Adam Smith wrote 'The Wealth of Nations,' his policy recommendations were based on impressions of the world of his time", said Card. "Today, instead, we try to inform policy makers about the underlying questions that are important in determining a policy". A clear example of this, he added, is the debate on immigration, where the impact on the labour market “is not a theoretical question, but an empirical one, which can be studied with data”.
Card used the metaphor of the scientific method, comparing economics to randomised controlled experiments common in medicine. However, he highlighted the limitations of this approach in his field: “There is almost never a situation in economics where something simply happens or doesn’t happen; most of the time there is a huge amount of variability”, he said. As an example, he mentioned the challenge of identifying the causes of recent inflation: “We don’t have a ‘parallel universe’ without COVID or without inflation to make direct comparisons”.
A highlight of the conference was the analysis of minimum wages. Addressing the increase in the minimum wage in Spain, which was raised by 54% since 2018, Card stressed that while evidence in other contexts shows that the impact on employment is usually small, “it would be useful to have more studies that measure how this affects the profitability of companies and other factors”. He also mentioned that in the past, some countries, such as the United Kingdom, have had different minimum wages for different sectors, but that today, the trend in Europe is towards a common minimum wage, which can create regional challenges. "An adequate wage in a big city may not be adequate in other smaller regions", he said.
Card also delved into the topic of immigration, a hot debate in Spain and Europe. He indicated that, in his opinion, immigration policies "are not being driven by economics". According to his experience and studies, many people who oppose immigration do so more out of concerns related to religion, language and culture than for economic reasons. "This is part of human nature", he concluded.
The colloquium ended with a question-and-answer session in which artificial intelligence and its potential impact on the labor market were addressed. Card noted that while it's still early days for this technology, "adoption could increase productivity, especially among lower-skilled workers", which is an interesting shift from previous technologies that have traditionally benefited highly skilled workers more.