Natural experiments as the latest tools in labor economics

Abstract

The works by three scientists: D. Card, J. Angrist and G. Imbens received the highest award of economic scientific heritage in memory of A. Nobel last year. The scientific community recognizes their empirical contribution to the labor economy and their original view of causation and justification of methodological approaches to their evaluation in real life. It is well known that most of the problematic issues in the social sciences are related to causation. There is a need to assess the effects of uncontrolled migration on wages and employment in the regions where migrants arrive. And how to assess the impact of the duration of education on future earnings? The lack of a comparative framework, such as information on the consequences of changes in migration or refusal to continue training, makes it very difficult to assess the consequences and causation. But the winners of 2021 proved the possibility of answering such questions by conducting natural experiments that are similar to clinical trials in medicine. The results of their research have allowed economists around the world to obtain and use the toolkit of natural experiment in the study of economic processes. Without violating ethical norms, the winners were able to assess the effects of various factors and the socio-economic effectiveness of causal relationships. A special advantage of their scientific results is the change of the research paradigm and the updating of tools in labor economics. Renouncing the traditional view of experimentation, the Nobel laureates in economics argued that they could consider a significant number of economic agents in roughly the same situation and, observing changes in their behavior and consequences, conclude and evaluate causal relationships. The author of the article, analyzing the scientific achievements of last year's winners, concludes that the latest toolkit for randomized experiments have allowed the winners to get original and very controversial answers to traditional tasks, thus carrying out a "revolution of trust" in economics.