Alan Krueger: A Labour Economist Remembered

Alan Krueger 1960-2019 Credit: Bloomberg News

On 16 March 2019, the Princeton University labour economic Alan Krueger apparently committed suicide.

It is worth remembering that Krueger died before he reached the age of 60 and before he had reached the age of 40, in 1992, he had co-written an economic research paper with David Card on the effects of minimum wage increases.

Krueger and Card examined the effects of two neighboring U.S. states – Pennsylvania and New Jersey – to study the effects of minimum wage rises on employment. New Jersey had raised its minimum wage and Pennsylvania had not. Prior to this 1992 paper standard economic theory held that raising the minimum wage, all things considered, would lead lower levels of employment. If you raise the price for something, there will be less demand for it. Since wages are the price of labor, raising wages was thought to reduce overall relative levels of employment.

Krueger and Card proved that assumption wrong in their paper. They demonstrated that New Jersey experienced a relative increase in employment over Pennsylvania. Therefore minimum wage increases were not a policy harmful to employment.

Krueger’s paper has been cited ever since it was released, and it has been used by the American Left since 1992 whenever the argument over not only the minimum wage but wages in general has come up. Krueger’s paper has influenced the ‘Fight for 15’ – i.e. raising the US Federal minimum wage to $15.00 an hour, minimum wage hike campaigns in every major U.S. state and affirmed that the purchasing power of labor is an integral part of driving the economy.

Krueger served in both the Clinton and Obama Administrations. He was an accomplished man and a dedicated public servant. His loss is a blow.

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