This episode of the Matrix Podcast features an interview with Adriana D. Kugler, the World Bank Group Executive Director for the United States. Dr. Kugler was appointed by President Biden and confirmed by the Senate in May 2022. She is the first Latinx person and first Jewish woman to be appointed to this position since the foundation of the World Bank in 1944. She is also a proud UC Berkeley alumna who graduated with a PhD in 1997.
Prior to joining the WBG Board, Dr. Kugler had a long and distinguished career in research and policy as a development and labor economist. Her contributions on the impact of government policies and regulations on labor markets were recognized with the 2007 John T. Dunlop Outstanding Scholar Award from the Labor and Employment Relations Association, and with the 2010 First Prize for Best Contribution in the area of “Globalization, Regulations and Development” from the Global Development Network. Dr. Kugler has also served in high-level leadership roles in the public and private sectors. She was Chief Economist at the U.S. Department of Labor between 2011-2013.
Dr. Kugler was Professor of Public Policy and Economics (2016-2022), and Vice Provost for Faculty (2013-2016) at Georgetown University. She was Chair and Chair-elect of the Business and Economics Statistics Section of the American Statistical Association in 2020 and 2019, respectively; was a member of the Board on Science, Technology and Economic Policy (STEP) of the National Academies of Sciences, Engineering and Medicine (2019-2022); and served in the Technical Advisory Committee of the Bureau of Labor Statistics (2016-2019). She was an elected member of the Executive Committee of the European Association of Labor Economists (2003-2009) and of the Executive Committee of the Latin American and Caribbean Economic Association (2015-2019). Dr. Kugler serves on the Audit Committee (AC) and Committee on Development Effectiveness (CODE). Kugler received her Bachelor of Arts degree from McGill University in 1991, graduating with first class joint honors in economics and political science.
This interview was conducted by Danny Yagan, Associate Professor of Economics at UC Berkeley, who is on leave as Chief Economist of the Office of Management and Budget. Yagan was a Faculty Research Fellow of the National Bureau of Economic Research, a Faculty Associate of the Berkeley Burch Center for Tax Policy and Public Finance, and Faculty Co-Director of the Taxation and Inequality Initiative of the Berkeley Opportunity Lab.
Listen to the interview below, or on Google Podcasts or Apple Podcasts.
A transcript of the conversation is included below, edited lightly for length and clarity.
Danny Yagan: Adriana Kugler, it’s so nice to have you join us returning to Berkeley virtually, to get to have this conversation about government service and academic impact, and public service impact, and the course of your work and trajectory from Berkeley.
Adriana Kugler: Thank you so much. And I know you’ve been in public service yourself just recently, so I know you’ve seen it from all sides, as well.
Yagan: Yes, it will be exciting to compare notes with you here. First, could you tell us a bit about yourself and how you got started in economics, and what drew you to a PhD?
Kugler: I was born in the US, but I grew up in Colombia, where I was exposed to social problems at a very young age. In fact, my parents were heavily engaged in social projects. And I remember, even as a young girl, they would take me to the shanty towns around Bogota, and to the rural areas. We actually traveled the country by car. My parents both worked and my grandparents lived elsewhere. So I would spend the summers with them. And in fact, my maternal grandparents lived in one of the poorest states in Colombia. So from a very young age growing up, I saw homelessness, child labor, poverty, and lack of access to basic necessities like drinking water to electricity. And very poor infrastructure: I remember getting stuck on a road with my parents for almost an entire day because of destruction of a road.
These are the things that take up your mind, and wanting to address these social issues, I embarked on a double major in economics and political science. My love for math immediately drew me toward economics, rather than political science. And I also felt, as I moved on through my undergraduate years, that data and economic tools provided answers to these social problems that I cared so much about. They grounded me more firmly in objective and clear criteria. I felt they gave me a better tool.
Then I had to decide whether to do a PhD. There were two key factors. The first one is that I loved doing research as an undergrad. I worked for two professors as an undergrad and as a research assistant. Second, I got to see very bright women having the opportunities they deserved at work. I thought, maybe if I get the highest possible degree I can get, I’ll receive the respect and advancement opportunities that I would like to see in my career. Those were two key factors that contributed to my pursuing a PhD.
Yagan: And here you are as World Bank Group Executive Director for the United States. Looking back from where you’re sitting now, has it held true for you that by pursuing the highest degree possible, you’ve been able to break through glass ceilings and be given the runway that you merit in the course of your work?
Kugler: I feel it definitely opened doors for me. I also felt that I have been very lucky to find mentors along the way who have opened doors for me. And I certainly feel that that as a woman and a Latina and a Colombian-American, I have lived that American dream. You may have to work 10 times as hard to get to the same place. But I certainly have gone beyond what I could have dreamed.
Yagan: As you entered a PhD, you specialized in development and labor. Could you talk about what drew you specifically to development economics and developing countries, and then also the labor side of the equation?
Kugler: As I mentioned, I spent my childhood in Colombia, where I got exposed to some critical challenges facing the developing world. But I realized very quickly that it was lack of access to work that created obstacles to poor individuals and to poor households. That lack of access to labor earnings creates all sorts of income inequities, but also inequities in education, inequities in housing, inequities in access to health, and uneven in access to the legal system and to political power. It was lack of access to work and to labor earnings that generate inequities in everything else.
Yagan: I wonder if Berkeley felt like a really natural home for the kind of economics that motivated you. Could you talk about your time at Berkeley, and what it was like in those early years?
Kugler: I really loved my time at Berkeley. It was amazing, because I had four professors who taught me and mentored me closely who, after I left, ended up winning Nobel Prizes, the first being George Akerlof, who was my dissertation advisor, and Paul Romer, Daniel McFadden, and Oliver Williamson. They all taught and mentored me. George was the closest, and he had a great deal of patience and time. He allowed me to ask very unusual questions, given my background, and he actually encouraged it. And he always encouraged me to use a variety of methods, which I have done throughout my career. I was very grateful for that opportunity.
The department was a very eclectic and vibrant place. There was always a lot going on in the hallways of Evans Hall among the students. I still remain close to some of those classmates and friends from back in the day. Comparing notes to other people, it was a very cooperative environment. I remember having several study groups during those years when we were doing our coursework. And during my dissertation years, I had several dissertation discussion groups. It was just a very cooperative environment.
We spent many hours in the computer lab that was founded by Dan McFadden. He had just gotten funding from SAS to to fund the computer lab, and we spent many hours there sharing notes, and many late nights writing [software] programs, which back in the day took a lot longer. We sometimes worked overnight, or even for an entire week or several weeks, to write a simple program. We often met off campus, at Caffè Strada and Cafe Milano, spending time discussing the findings from the programs and data analytics we were doing.
I was very lucky in the last few years of my dissertation to get a fellowship for minority students from the Federal Reserve System, which gave me access to an office at the Federal Reserve Bank of San Francisco. I would go there regularly. I also got to interact with the economists in the research department there. In fact, Mary Daly, the President of the Federal Reserve Bank of San Francisco, was just starting at the time, so I was very lucky to get to meet her, and of course, she’s a labor economist. So it was a great time to be at Berkeley and a great environment. I developed friendships and relationships that I have kept until today. And in fact, I see my former classmates here in the hallways of the World Bank on a regular basis.
Yagan: You mentioned how collaborative the environment was, among the students and the faculty. I think that might strike people as maybe surprising, who might think that the upper echelon of graduate study is super competitive, but it’s the opposite, and much of what you learn is from your peers.
Kugler: I fully agree with you that that’s where you learn the most. After I left graduate school, I continued to do a whole lot of learning from my co-authors, both my senior co-authors and my junior co-authors. Throughout your career, you continue to learn from those interactions with your colleagues. And when you enter into these policy roles, oftentimes, you’re the sole economist in the room with people from other disciplines, so you end up learning from lawyers, anthropologists, agricultural experts, or others coming from very different disciplines.
I think it is very important to keep an open mind and learn from others. But one piece of advice is to keep true to yourself. Don’t start necessarily thinking like them, but bring them value. And keep the value of your tools and your knowledge as an economist to contribute to the conversation, not to just agree with them, but to maybe agree to disagree, and bring a different perspective. Because people do value that.
One piece of advice is to keep true to yourself. Don’t start necessarily thinking like them, but bring them value.
Yagan: One of the things I have loved about Berkeley that I like to share with students is that Berkeley Economics very much has a feeling of “data first, theory second.” It’s not that it’s only the data that matter, but that whatever theory you’re going to layer on top of has to be grounded in facts that we know about the world, and that we really credibly know. Was that true when you were a graduate student?
Kugler: That has certainly permeated throughout the decades of my work. Many of the ideas for papers that I have developed came from reading the news or from talking to non-economists and trying to find out answers that we didn’t have. There was certainly a sense that there was a lot of value in having this inductive method, starting from the data and being open to exploring different answers about why the data was telling you what it was telling you. But there was a bit of a back-and-forth between inductive and deductive: you look at the data, but you also want to have an angle, a perspective to look at that data. You don’t just openly look at the data and look at a million possible interpretations of if. In economics, theory does guide you to look at potential reasons that could be explaining that data. Maybe the data will come and really question any of those theories. And then you can come up with something different than what you even expected based on the traditional theories that are out there. That was part of what we were taught back in the day: look at the data, look at the theory, and maybe even come up with new theories, of course.
Yagan: That interplay is the scientific method. In physics, there are theoretical physicists, and there are empirical physicists who are firing protons and neutrons and different atoms, and they have an interplay that advances knowledge. In the best sense, that economic paradigm that you just laid out is similar. That’s a great segue into your own academic work. You’ve taught at several renowned institutions, most recently at Georgetown. Can you give us a flavor of the types of contributions that you’ve offered and questions that motivated you?
Kugler: My academic work has focused largely on examining the impacts of policies on labor market outcomes. As I said, I think that labor earnings and access to work explain a lot of the other disparities that we observe. I’ve always cared about, how do policies affect the opportunity to access work, or deny it? It can be in both directions. I have looked at the role of labor regulations, the role of caps on regulations, immigration, trade, and other policies like that. As I mentioned, I have always been very interested in finding answers to these questions through data, and trying to look at causal effects. I have tried as much as possible to rely on experimental but also non-experimental methods, because it is not always possible to run clean experiments. Thinking very cleverly about potential non-experimental settings can allow us to identify causal effects.
I wrote a series of papers on vocational training, all based on on experimental designs, and randomly assigning people either to technical training or not training. There’s a whole debate about whether it’s even worth it to spend money on these programs. This is about second chances. This matters for a lot of the contexts that I work with here at the World Bank, and in a lot of low- and middle-income countries, where people drop out of the formal education system, and you kind of waste entire generations of people. You have to give them second chances.
This work has been very enlightening, because you’re not necessarily offering a PhD to a person, you’re instead giving them very practical skills about how to be an electrician, how to be a plumber, how to be a driver — all these things that are highly necessary. But what we found in this series of papers is that providing technical training alone may not be enough. You also have to provide life skills or soft skills, and access to transportation and childcare. Otherwise, someone might never even make it to training. So when you combine a series of services, then you find these very high returns.
Some people say, these vocational training programs might have high returns, but they disappear very quickly. But in one paper, we were able to follow people for a very long period of time. We looked at people a decade or 15 years after. And what you see is that they’re still gaining a lot in terms of their income rising, in terms of them being able to go into the formal education system as a result of engaging in vocational training. There are these unintended but positive consequences to the rest of the family that is spread throughout the rest of the family and throughout entire communities.
As economists, we tend to focus on unintended negative consequences, but in this case, the message of this paper is that by spending a little bit of money on one person, the benefits are much more widespread. When you do a cost-benefit analysis, the result you get is totally different if you take into account not only how long-lasting the effects are for a single person — not only through immediate work, but also allowing them a door to get back into the formal education system — but how it affects an entire community. The returns and the benefits are so much greater when you take account of those other ways in which the program offers opportunities, not only to the individual participating in the program, but to their entire families.
Yagan: That’s so powerful. When I was at the Office of Management and Budget as Chief Economist, properly accounting for total benefits and total costs is very hard and very important. It’s amazing how much the cost-benefit analysis can change when, as you say, you look at social returns, not just private returns for a major investment.
Speaking of public service, this is not your first stint in public service. You served in the Obama Administration, as well. What drew you from academia into public service?
Kugler: The whole reason for me going into economics was to help come up with solutions to some of these social problems that I cared so much about. When when I started my career, even early on, I was very positively and happily surprised to see that some of my papers, even as I was an assistant professor, were starting to receive attention from policymakers in the U.S. and around the world. I was just thrilled when I was invited to serve as Chief Economist under the Obama Administration, because this was a very critical time. This was right during the Great Recession, at a time when the unemployment rate was at double-digits for the first time in many decades. We needed to come up with some ways to bring down the unemployment rate to help people navigate these very critical times for families and households. The poverty rate had increased during this time, as well. So I was very happy that we were jointly with a great team. There were two labor economists at the time at the Council of Economic Advisers that I worked with very closely. Alan Krueger was one of them. Being able to have counterparts at the White House to work with on policy solution, like unemployment insurance and training programs and all sorts of tax credits that we thought could stimulate job creation — was very keen, and we saw some good results for sure.
Yagan: That might be helpful for people in understanding how a presidential administration works. You were the Chief Economist at the Department of Labor. And you were distinguishing your role at this major cabinet department with that of Alan Krueger and another labor economist at the Council of Economic Advisers, which sits within the Executive Office of the President. Talk about that interplay between where you sat and where Alan sat, the Department of Labor versus the White House. Help people understand this aspect of how government functions.
Kugler: There is often a sense that there are these silos in the government, that the Labor Department never interacts with the Commerce Department, or the Department of Education, or the Department of Health and Human Services, or even with the White House. But I can tell you from both administrations I have worked with that I see a whole lot of cohesion and interaction between agencies, which I think is very critical to coming up with good policies. Think about labor and education: if you’re thinking about these transitions from school to work, you need to coordinate efforts. If you’re talking about some of these programs that may require additional services, you need to coordinate with Health and Human Services. If you’re talking about tax offices, you certainly need to talk to Treasury. If you need to design programs that engage the private sector, you’re going to have to talk to Commerce. But the White House at the end is doing a lot of the negotiations, which is a key part of putting policies into practice. The White House will be the interface with Congress, and they will make the magic happen and hopefully turn policies into legislation. You need funding and you need the support of Congress to make some of these policies happen.
Along with Alan Krueger, I knew Katharine G. Abraham, who was at the Council of Economic Advisers. They would organize bi-weekly meetings of all the economists in the administration to coordinate efforts, because it was very important to do that. At the Labor Department, I was one of the few economists interacting directly with the Secretary and Assistant Secretary. So I was a lone voice. But they certainly listened very carefully to me. And they counted on me to pass the message along to others in the administration, about some of the priorities and making the economic case for pursuing some of the policies that they wanted. It was very key to have that communication, to have coherent policies where we wouldn’t be duplicating efforts but in fact would be complementing each other, and also then to make it happen.
Yagan: That resonates so much with my experience in learning how the gears move. That’s a great segue, because now you’re no longer in the administration, you are in a Senate-confirmed position at the World Bank, which hopefully everyone understands is a huge deal. Very, very few people who are appointed by the President actually become Senate-confirmed, so congratulations on that. Can you help people understand, what is the World Bank? Where does it fit in the set of international institutions, like the US State Department, the International Monetary Fund (IMF), USAID, and others in the ecosystem? And for you, as Executive Director for the United States, what are your priorities?
Kugler: After going into the Great Recession and trying to solve the issues of unemployment here in the US, I was very honored to be approached by President Biden to be nominated to be the US Executive Director of the World Bank, at a very critical time for the world. We had multiple simultaneous crises going on all at once that needed to be tackled.
The World Bank was founded in 1944, right at the end of World War II. The Bank has several arms, but the initial arm was the International Bank for Reconstruction and Development, or IBRD, which was founded with the goal of rebuilding or reconstructing the world after the atrocities of World War II.
By the way, being Jewish and having had my father’s side of the family flee Europe in 1939 and having had family pass away in concentration camps, the mission of the World Bank really resonates for me. And unfortunately, we’re really building the world again from many atrocities, man-made and not man-made. But we’re back in the same situation. The regional role of rebuilding and reconstructing has come back in some sense.
Much of what the World Bank does is finance long-term development for countries. It invests in infrastructure projects, but also human capital, health, and education. On the other hand, the role of the Bank over time has grown to be a knowledge bank. There’s a lot of knowledge about best practices around the world, about policies that work and don’t work. And so there is a lot of technical knowledge and advisory services that the World Bank gives to the rest of the world to help in capacity-building, to help countries build up capacity of their own and to build institutions with regulatory processes and regulatory capacity, which facilitates the private sector to come in and function well, and to help with macroeconomic management. That’s where I think it differs from, say, the IMF, which is much more focused on the cyclical aspects and the macroeconomic management of things.
The State Department deals a lot with the diplomatic relations. We deal with more of the economic tools that we have to help countries make progress. At the State Department, a lot of the focus is on career diplomats using diplomatic tools to build relationships and to help advance development in other ways. The US Agency for International Development, or USAID, is the bilateral arm that the US has to provide assistance for development to countries, but it’s much smaller, because it’s just the US. At the World Bank, the US is the largest shareholder, but we have 179 countries contributing. Poor countries find it worthwhile to contribute to the Bank, so we can pull resources and then lend to the countries that need them the most, including very poor countries and middle-income countries. And then you have technical assistance that is provided sometimes to even higher middle-income countries.
It’s a combination of services that are provided by the Bank to advance what have so far been the twin goals of promoting prosperity and reducing poverty. Having said that, part of my role as Executive Director is to think about our strategic direction and the strategic priorities that the Bank should have. Are those twin goals where we should stay focused? Or should we be thinking about some of the new challenges that have come our way, including health pandemics, including climate change, including political turmoil and migration, and other issues that cross borders and that each country cannot solve on its own? Maybe this is a critical time for an organization like the World Bank to rethink its mission, and to think, it’s not only about working individually with countries to help them advance their growth potential and reduce poverty, but we need to deal with these issues that affect us all, that each country individually is not going to take on.
There are big benefits to all other countries from doing it. So we need to figure out ways and mechanisms, and the World Bank is an ideal place to tackle these issues, where there are large externalities, huge spillovers from undertaking actions, but [one country] shouldn’t be solidly the one assuming that cost of resolving that issue.
In some sense, this is kind of the core function. But incredibly, we also review every single project. We just approved $170 billion to be dispersed over the next 15 months, the next fiscal year and a little bit more. Last year, we had about 1000 or so projects. This year, we may have about 1000 projects that we have to approve to the board. And we review every single one of those, because it is important to know how the money’s being spent. And in some sense, we want to avoid programmatic risk, but we also want to avoid fiduciary risk, so we want to make sure that that we don’t undertake actions that are going to be harmful for countries. But we also want to make sure that we spend resources well, and in the best possible way we can. So we have both a programmatic duty and a fiduciary duty in the role of executive directors. Those are two big issues that we worry about.
Yagan: That is fascinating. And I wonder if you have a way to think about the United States’ special role in the world. You said we are one of 170 shareholders of the World Bank, yet we’re also the largest. In your experience at the World Bank, does the United States’ special role and opportunity and platform and position of influence feel like a really special catalyst for all this global change that you hope to effect?
Kugler: We are the largest shareholder. We don’t quite have veto power, which we do in some other organizations, for example in some of the regional banks. But we do carry a lot of weight, and people look for our leadership. And they have seen that leadership diminished over the past few years. So they’re happy to have us back playing a leadership role, and leading on efforts and tackling the challenges that face us today.
For example, here at the World Bank, one of the things we have done over the past past many months is to help Ukraine economically. The US has played a key critical role in addressing the economic needs of Ukraine, which as we know, has huge implications for the rest of the world. The Russian invasion of Ukraine, unfortunately, has affected the rest of us in all sorts of ways. It has affected economies around the world. It has affected the food insecurity that is being faced throughout the African continent, but also in South Asia, Latin America, and other parts of the world. Here again, a single country cannot take it upon themselves. It has to be an ongoing thing, because it affects all of us. And so we need to take joint action. But certainly, people look up to US leadership not only on resources, but on thought leadership. How are we going to tackle these critical issues? And how are we going to find solutions that help us address them?
People look up to US leadership not only on resources, but on thought leadership. How are we going to tackle these critical issues? And how are we going to find solutions that help us address them?
Yagan: I wonder if you can describe how you think about this unique role that you serve. How much do you try to stick to straight policy analysis, as in, “this is the right answer, and then you politicians can do what you want with it?” How much do you try to problem-solve within the political constraints to find the most viable policy that can be implemented? How do you understand your own role in the interplay between technical expert and player in a political enterprise?
Kugler: As an economist, I’m certainly very founded on evidence-based policymaking. I think we need to find the best possible policy solution that we may have to address a certain issue. But you’re so right that we have to be very aware of the political constraints, and sometimes work around those constraints. Sometimes you have a first-best solution to an issue, and to get around those political constraints and to come up with some solution, as opposed to not having any solution at all, you may have to come to a second-best solution. You may have to compromise. And you may have to adjust your original thinking on an issue and your original solution to a problem. Certainly, that’s very key.
I sit around 24 other executive directors who cover Africa, Latin America, the Asia Pacific, and other regions. You need to understand their motivations if you want to bring them along with you. You need to understand what drives them and what are their political constraints so that you can help them, and you can make the case for them that this may be better than doing nothing. If you get stuck, that’s often the solution, doing nothing. It is key to understand others’ motivations in these political settings, to understand, how can you help them, to bring them along, and to get them to understand that this will be to their benefit as well, and maybe even minimize some of the costs that they see with a given policy?
Yagan: I love the economist framework: minimizing the cost for them to take that next step. You’ve described how your motivations to get involved in economics, but also in public service, stem from your experiences from childhood, and the fact that you’re Colombian-American and a Latina, how that has shaped how you’ve thought about your career. And I wonder how that perspective shapes the work you’re doing and how you bring your technical expertise in special ways at the bank?
Kugler: I certainly believe that my background as a Colombian-American, and my global upbringing — having lived not only in Colombia, but also on other continents and having traveled to some 50 countries around the world — allows me to understand the realities of other countries and understand others’ perspectives. When I talk to my African colleagues or my Latin American colleagues, they know I’ve traveled in their countries, they know I understand first-hand the realities in those countries and the constraints, too. It’s not only their problems, but also their constraints.
And so I would say, they view me very differently. I am the first Latina to hold this role. And I have this global upbringing that is different from maybe what other US EDs have brought to the role. So this has created a sense of trust and a sense of being heard by me. That really helps to bring us together to try to tackle some of the problems we face today together at the board. It does help in communicating and finding solutions.
Yagan: I’m so glad that you’re in this role. Closing out, I wonder if you have any lessons that you would offer to academic colleagues or for people just coming out of Berkeley who want to make an impact in the world. What advice would you have for a first-year PhD student or undergrad at Berkeley, trying to find their way?
Kugler: I would certainly say to keep focusing on the key problems that we face today. If we hope to make progress as an economist, I think that’s where we can have the greatest impact, which is to find solutions not to the problems we had a decade ago, but to the problems that we’re facing today. Focus on the key problems that we face today.
That’s where we can have the greatest impact, which is to find solutions not to the problems we had a decade ago, but to the problems that we’re facing today.
But I think you have to be passionate. In my case, I was a labor economist with a real passion. I saw that how work offered opportunities to individuals and to households to come out of poverty and to have opportunities moving forward. So I think each of us gets motivated by our own issues.
Stay grounded in evidence. I do think about the data work that happily you’re still advancing at Berkeley, and focusing on what the data tells us to inform those problems. When you move away from that academic setting to a non-academic setting, it is good to stay true to yourself as an economist, because you’re interacting with so many others that think in a different way. And you may start thinking just like them, but then you add little value. It’s when you stay true to yourself to being an economist, and you’re surrounded by many others coming from other disciplines and perspectives, that you can bring a little bit of your way of thinking, which is not typical for most. Even here in the World Bank, there are many economists. But yet, because people have been in this organization for so many years, they do think about certain issues in certain traditional ways. And I think it is good to come from the outside to bring some new thinking.
Yagan: That really resonates with my own experience, just having served [in the White House], and hopefully students will hear your words when they listen to this, and that can be an enduring ethos at Berkeley for years to come. So thank you so much for rejoining Berkeley virtually here, and we’ll look forward to reading and hearing about all your great work in the new post.
Kugler: Thank you. Thank you very much, Danny, and thank you very much for your service.
