Krueger returns to University after time at Treasury Department

Kreuger began working at the Treasury that month and was nominated to the position of assistant secretary of the Treasury for economic policy in March of that year. While Krueger knew that he was entering government in an unusual era, he did not expect to devise policies that would cost tens of billions of dollars and form the basis for legislation.

Krueger has returned to the University this month and will resume teaching next semester.

“It seemed to me that it was really the most important moment to get involved in public policy in my lifetime,” Krueger said. “But as the administration and Congress enter a new phase, I think that my social marginal product is higher now at Princeton than in staying at my position at the Treasury.”

In the spring semester he will teach ECO 348: The Great Recession: Causes, Consequences and Remedies — a new course designed to shed light on both public policy’s contributions to the crisis and its responses in the aftermath.

“It gives [us] a certain perspective on the value of academic research in the policy world,” Wilson School professor Cecilia Rouse said of returning to academia after working in public policy. “It also helps us give both our graduate students and our policy students a better idea of what type of academic research the policy world is able to digest.”

Rouse, who served on the National Economic Council during the administration of President Bill Clinton, met Krueger while studying economics at Harvard. She currently a member of the Council of Economic Advisers

During his time in Washington, Krueger ran the Office of Economic Policy and was the chief economist of the Treasury for the last 21 months.

Krueger had minimal free time at work. Most days, he said, he would eat a brief lunch at his desk amid frequent interruptions from other Treasury staff. “Mostly I missed having the opportunity to focus on something for more than 15 minutes without being interrupted,” Krueger explained.

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Wilson School professor Ilyana Kuziemko, who served as a deputy assistant secretary under Krueger, said that many of the economists that had worked at the Treasury for more than a decade repeatedly described him as “the smartest person they ever worked for.”

“We all learned a lot from him,” she added.

On returning to academia, Krueger said that he looks forward to once again working on long-term research projects. Krueger has published more than 100 papers and has written seven books.

“As an academic and someone who works for policy, he is unbelievably creative, very well-prepared, and knowledgeable and insightful about the labor markets and the economy in general,” Rouse said.

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Wilson School professor Michael Oppenheimer, who has known Krueger for several years and collaborated with him on a paper published in July on the effects of climate change on human migration patterns, described him as a researcher at the top of his field.

“He’s very eager to sort of roll up his sleeves and apply his knowledge in a way that gets to things that are fundamentally important about the world, how it operates and how to elucidate policy,” Oppenheimer said.

This was not Krueger’s first stint in the policy world. He previously served as chief economist of the Department of Labor in 1994 and 1995, an experience that he described as one he “could not have functioned without” during his latest appointment.

In Washington, Krueger worked alongside several of his former colleagues from academia. His Ph.D. dissertation adviser at Harvard was Lawrence Summers, director of the National Economic Council; his tenure was granted by a committee chaired by Ben Bernanke, now chair of the Federal Reserve; and his previous students include Peter Orszag ’91, former director of the Office of Management and Budget.

In addition to his previous policy experience, Krueger also found that his background in academia helped him in examining the effectiveness of government initiatives.

As an academic, for example, Krueger analyzed the effect of education on future wages by comparing twins, which controlled for differences in genetic background and upbringing.

Krueger used a similar approach to evaluate a new financing option, Build America Bonds, which offered reduced borrowing costs for local and state governments along with a different set of taxation rules. For this analysis, he controlled for differences among governments and timing by studying governments that offered both Build America Bonds and traditional municipal bonds on the same day.

His research led President Barack Obama to propose legislation that would extend the new bond initiative for 10 years. The House of Representatives passed the bill, but the Senate has yet to do so.

“My work in Washington certainly had more of an immediate impact, and more of an impact on people who are involved in making decisions and implementing policies,” he said. “But on the other hand, research that I have conducted at Princeton also has had an impact on policy, just on a different time frame and on a different scale.”

Correction: A previous version of this article implied that Alan Krueger began working at the Treasury in March 2009 when, in fact, he stepped in as a counselor to the Secretary and Chief Economist of the Treasury in February. He was nominated to the assistant secretary position in March of that year.