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Who is Alan Krueger? And why is he speaking for the White House on Inequality?

January 11, 2012

Alan Krueger, Chairman, Council of Economic Advisors

Alan Krueger is a labour economist who teaches at Princeton University.

On August 29th President Obama appointed him the Chairman of the Council of Economic Advisors, and his appointment was confirmed in November.

In this role he will be giving what is only his second speech on Thursday January 12th at the Center for American Progress in Washington on “The Rise and Consequences of Inequality.”

In The Little Book of Economics: how the Economy Works in the Real World, Greg Ip—a journalist who currently works for The Economist magazine, a Canadian who graduated from Carleton University—describes the decision-making process in the United States as it relates to economic policy.

He calls the Council of Economic Advisors the

“president’s in-house think tank. It is a creature of the Employment Act of 1946 and that era’s utopian belief that good economics can produce better government. The CEA is peopled mostly by itinerant economists plucked from academia or think tanks for two- to four-year stints.”

The other key agencies that give the president advice are the National Economic Council, The Office of Management and Budget, and the Treasury. But these also have budgetary responsibilities. The CEA is strictly an advisory body giving the president expert objective opinion, and also criticizing bad ideas and recommendations before they start influencing public policy.

In Canada, we do not have an equivalent to the CEA, much of the economic advice to the Prime Minister coming through the Minister of Finance and other government departments via the public service.

There was at one point something called the Economic Council of Canada, which produced public policy reports for the government, and in particular an Annual Report in the manner of the CEA.

But it was not as closely tied to the Prime Minister’s office as the CEA is to the White House. It would take its mandate and questions of interest from the Prime Minister, but then was free to research, commission, and publish reports dealing with public policy in an independent way … until it was shut down in the February 1992 budget.

I worked there for a couple of years during the late 1980s, and it is where I started my research on unemployment and unemployment insurance. I learned a good deal about these topics and others like the impact of education on earnings, the role of higher minimum wages, and generally how to use data to best effect by reading Alan Krueger’s research.

His publications with David Card—another Canadian who did his undergraduate degree at Queen’s University—suggested that higher minimum wages may actually lower, not increase unemployment rates, and received particular attention.

The Council of Economic Advisors website describes Krueger as a “labor economist”  who ” has published widely on the economics of education, unemployment, income distribution, social insurance, regulation, terrorism, finance and the environment.”

This gives you a good sense of what the sub-field of labour economics is: it is the economics of work and pay, and as such it most closely speaks to the concerns of everyday life; the economics of whether I will have a job or not; how long it will take me to find one, and how much I will get paid; the payoff to more schooling; how well my children will do in life; the extent which growing up poor means a child will grow up to be a poor adult.

The aftermath of a major recession is a good time to appoint a labour economist as the Chairman of your personal think-tank.

Krueger had spent some time in the White House in the earlier days of the Obama administration, but was back teaching at Princeton University last winter. I sat in on his course and chatted a bit with him on a couple of occasions during my visit there as a research fellow last year.

At a personal level he seems to be a thoughtful and respectful person, treating students and colleagues with equal sincerity.

That is the kind of discussion I think you can look forward to if you watch the live stream on the Center for American Progress website starting at 10:00 am, January 12th.

Krueger will tackle an important public policy concern, income and earnings inequality, in a way that is framed by a solid understanding of economic theory, a healthy appreciation of what the data tell us, and communicated in a way that is widely accessible.

My sense is that his talk is intended to complement and move forward some of the views on inequality in the United States that President Obama spoke about in a speech on December 6th in Osawatomie, Kansas: “this kind of inequality — a level that we haven’t seen since the Great Depression — hurts us all.”

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