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Canadians from coast to coast were excited to see one of our own, Alice Munro, awarded this year’s Nobel Prize for Literature. However, she may not be the only Canadian to be awarded a medal this year. The so-called “Nobel Prize in Economics” (more accurately known as the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel) will be awarded Monday morning and two Canadian economists are considered to be top contenders.
Thomson Reuters has picked Berkeley economist David Card as the prize favourite, along with non-Canadians Alan Krueger and Sir David Hendry. Card was born in Guelph and received a BA from Queen’s before obtaining a PhD from Princeton. Card and Krueger gained notoriety for their research on the effect on employment of the minimum wage. Their early 1990s study Minimum Wages and Employment: A Case Study of the Fast-Food Industry in New Jersey and Pennsylvania (available for download here) showed “no indication that the rise in the minimum wage reduced employment” and sparked a national debate. Card is ranked No. 36 on Research Papers in Economics’ (RePEc) list of most commonly cited economists; and Google Scholar indicates one of his papers on education and the labour market has received even more citations than the famous Card-Krueger study. His body of work on the effect of immigration, education, technology and the role of labour unions on employment and wages makes him a timely pick for the 2013 award, when so much of the popular discussion is on the decline of middle-class labour.
The Wall Street Journal has identified as a possible pick another Canadian, Peter Howitt of Brown University, along with Frenchman Philippe Aghion. Howitt received a B.A. in economics from McGill and an M.A. from Western, then moved to Northwestern University in Chicago for his Ph.D. Howitt was a professor in Western’s economics department for 25 years before moving to Ohio State and his son was a classmate of mine at Western. Howitt was just one of many talented economists that left Western during the early-to-mid 1990s, along with Preston McAfee and Jeremy Greenwood.
Aghion and Howitt are well known for their work in the subfield of macroeconomics known as endogenous growth theory. Their most well-known paper, A Model of Growth Through Creative Destruction (available for download here), utilizes Joseph Schumpeter’s concept of creative destruction to model economic growth. Zhe Li has a useful summary of the model. Their research is a good example of the kind of highly technical macroeconomics conducted at “freshwater” schools from the 1980s to present. I remember spending far too many hours struggling with the Aghion-Howitt model as a Ph.D. student at the University of Rochester. Howitt is ranked No. 186 on the RePEc list.
Card, Howitt, or some dark horse candidate that has yet to emerge, could be Canadian winners on Monday. I’m cautiously optimistic!