A closer look at Alan Krueger’s academic work
Now that Alan Krueger has been tapped to be the next chairman of the White House Council of Economic Advisers, it’s a great time to take a peek at his academic work. Krueger is known for his empirical research — he’s more of a data guy than, say, Larry Summers — and he’s accumulated a long trail of papers over the years. Here’s a look at some of the topics he’s delved into:
The minimum wage: Krueger might be most famous for the paper he did with David Card back in 1992 showing that an increase in the minimum wage doesn’t always increase unemployment, as most economists had long believed. Krueger and Card compared fast-food restaurants in New Jersey and western Pennsylvania and found that New Jersey, which had hiked its minimum wage from $4.25 to $5.05, didn’t lose jobs as expected. In fact, in some conditions, an increase in the minimum wage can actually boost employment. As Robert Waldmann explains, “Their logic is basically that firms can choose to pay a low wage and have a high quit rate and take a long time to fill vacancies or pay a high wage and have fewer quits and fill vacancies more quickly.” That said, Waldmann adds, this research doesn’t appear to be relevant to current labor-market conditions.
Unemployment: In 2011, Krueger and Andreas Muller conducted a survey of 6,025 unemployed workers and found a couple of interesting things. One, “the amount of time devoted to job search declines sharply over the spell of unemployment.” Second, out-of-work job-seekers tend to be picky: The minimum wage a worker will accept tends to be pretty close to the wage of his previous job, and it doesn’t drop very much over time, even if he stays unemployed.
The value of Harvard: In February, Krueger and Stacy Dale found that elite universities don’t seem to offer much benefit to students over lesser universities. How’d they do this? By looking at the schools students applied to. As David Leonhardt summarized: “A student with a 1,400 SAT score who went to Penn State but applied to Penn earned as much, on average, as a student with a 1,400 who went to Penn.” In other words, if you’re good enough to get into an Ivy League school, you’ll do well no matter where you go.
Tax breaks for Big Oil: While at Treasury, Krueger looked at what would happen if Congress junked some $36.5 billion in tax breaks for gas and oil producers over the next decade. Answer? Not much. As he told Congress in 2009, scrapping the tax breaks would only decrease domestic production of oil and gas by less than 0.5 percent. Natural gas prices would, in the absolute worst case, tick up by 1 percent, while world oil prices would hardly budge at all (that’s because U.S. oil production is relatively small in the global scheme of things).
Occupational licensing: Libertarians should be interested in the paper Krueger did with Morris Kleiner showing that some 35 percent of all jobs are licensed or certified by the government. Think cosmetolgists or barbers, who usually have to be licensed by a state board. The wage premium that comes with licensing is about 14 percent — pretty similar to the effect that unions have on wages.
The economics of terrorism: Here’s Krueger’s 2007 book, “What Makes a Terrorist: Economics and the Roots of Terrorism.” Here’s an article-length version of his findings, for instance: “Indeed, if anything, measures of economic deprivation, at a country level, have the opposite effect from what the popular stereotype would predict: International terrorists are more likely to come from moderate-income countries than poor ones.”
The agony of commuting: Back in 2004, Krueger helped oversee a survey that tried to figure out how people spent their time and what actually made them happy. The researchers discovered, perhaps unsurprisingly, that “intimate relations were the most enjoyable, while commuting was the least enjoyable.”
The economics of rock music: This 2005 paper with Marie Connolly is too varied to summarize, but he does find that mixed-sex groups tend to command the lowest ticket prices (female bands command the highest), and offers a variety of theories for why ticket prices have risen dramatically since the 1980s.
Krueger is also a prolific columnist, having written for Bloomberg and the New York Times over the years. Here he is in March fretting about jobs, noting that the expiration of unemployment insurance at the end of 2011 might cause the unemployment rate to drop — but only because many people might just give up looking for jobs altogether. Here he was in April endorsing the concept of a budget trigger: “What I have in mind is his endorsement of a trigger that would automatically kick in to reduce spending and tax expenditures if Congress and the administration fail to bring the debt under control.”
And, for years now, Krueger has been bemoaning the sorry state of economic literacy in the United States. Here’s a column from 2004 noting survey research showing that most Americans get their economic info from television — and, as it happens, those Americans are the least informed. He also notes that people tend to base their economic views on ideology, rather than self-interest (for those interested in the partisan implications, he reports that conservatives and liberals do about equally well on tests of economic facts). With any luck, that’s a state of affairs he can try to improve, at least on the margins.