In 2021, economist David Card was one of three recipients of the Nobel Prize in Economicswhere he was recognized for his empirical contributions to labor economics, in which he argues that the minimum wage does not destroy employment.
Precisely, a few weeks ago, the Spanish Government raised the minimum wage by 8% to 1,080 euros. Given this, Card was surprised about the little increase that has occurred. “For a person who works full time, it barely costs eight euros an hour,” said the economist in an interview with El País.
Likewise, he ratified his position that it is not a bad thing to have an increase in the minimum remuneration. He explains that companies are reluctant to give raises because they anticipate that they will have to pay high salaries and that if they do not cut their staff they will have less economic benefits.
“Data from the restaurant sector in USA indicate that increases in the minimum wage are almost entirely passed on to customers. Something similar happens in other sectors. The owner of a store in a shopping center, for example, will try to negotiate a reduction in rent with the owner of the premises, and in agriculture it can lower the price of land. Raising the minimum wage does not create or destroy value, it only redistributes it. The people who lose out complain, and the people who win are in favor. It makes all the sense”, commented David Card to the Spanish media.
The economist also pointed out that when there is a salary increase, the negative impact is not the destruction of jobs in the short term, but that there are fewer incentives for companies to invest, which translates into worsening prospects. of employment.
“Some companies may stop creating jobs that they would otherwise create. On the plus side, big companies have gained a lot of market power in the last 25 or 30 years and raising the minimum wage can counter that distortion in the economy,” he said.
Source: Larepublica
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