Currently Chairman of the President's Council of Economic Advisers, Krueger plans to return to his position as Bendheim Professor of Economics and Public Affairs at Princeton University at the end of the summer.
"Alan was the driving force behind many of the economic policies that I have proposed that will grow our economy and create middle-class jobs," Obama said on Tuesday.
Calling him one of his ‘most trusted’ economic advisor over the last two years, Obama said Kruger understands the economy better than almost anyone.
"He has devoted his entire career to make sure our economy works for everyone, not just those at the very top.
“While we have more work to do, today our economy is improving, thanks, in no small part, to Alan's efforts," Obama said.
"I am deeply grateful to President Obama for the opportunity to serve twice in this Administration and for the chance to do what I could to help the Nation recover from the worst economic crisis since the Great Depression," said Krueger.
He added that it has been one of the highest privileges of his life to serve the American people.
Image: Alan Krueger speaks during a media briefing at the White House in Washington, November 26, 2012 ' Photograph: Kevin Lamarque/Reuters