Nikolaj A. Harmon, Assistant Professor of Economics, University of Copenhagen

The Old Main Builiding, University of Copenhagen

The Old Main Building. Summer,

University of Copenhagen.

© 2009 Nikolaj A. Harmon


Sustaining Honesty in Public Service: The Role of Selection
(with S. Barfort, A. Leth Olsen and F. Hjorth)

Forthcoming, AEJ: Economic Policy
Link to: Working Paper

We study the role of self-selection into public service in sustaining honesty in the public sector. Focusing on the world's least corrupt country, Denmark, we use a survey experiment to document strong self-selection of more honest individuals into public service. This result differs sharply from existing findings from more corrupt settings. Differences in pro-social vs. pecuniary motivation appear central to the observed selection pattern. Dishonest individuals are more pecuniarily motivated and self-select out of public service and into higher-paying private sector jobs. Accordingly, we find that increasing public sector wages would attract more dishonest candidates to public service in Denmark.

Peer Effects in Legislative Voting
(with R. Fisman and E. Kamenica)

Forthcoming, AEJ: Applied Economics
Link to: Working Paper, Appendix

We exploit seating rules in the European Parliament to identify peer effects in legislative voting. Sitting adjacently leads to a 7 percent reduction in the overall likelihood that two Members of the European Parliament (MEPs) from the same party differ in their vote. Peer effects are markedly stronger among pairs of women, MEP pairs from the same country, and in close votes. Using variation in seating across the Parliament's two venues (Brussels and Strasbourg), we show that peer effects are persistent: MEPs who have sat together in the past disagree less even when they are not seated adjacently.

Behavioral Dishonesty in the Public Sector
(with S. Barfort, A. Leth Olsen and F. Hjorth)

Forthcoming, J. of Public Administration Research and Theory
Link to: Published Paper, Working Paper

We investigate the usefulness of the dice game paradigm to public administration as a standardized way of measuring (dis)honesty among individuals, groups, and societies. Measures of dishonesty are key for the field’s progress in understanding individual, organizational, and societal differences in unethical behavior and corruption. We first describe the dice game paradigm and its advantages and then discuss a range of considerations for how to implement it. Next, we highlight the potential of the dice game paradigm across two diverse studies: prospective public employees in Denmark (n=441) and prospective public employees in 10 different countries with very different levels of corruption (n=1,091). In the first study, we show how individual-level behavioral dishonesty is very strongly correlated with public service motivation. In the second study, we find that widely used country-level indicators of corruption are strongly correlated with the average behavioral dishonesty among prospective public employees. The results illustrate the importance of the validated dice game paradigm to shed light on core questions that link micro- and macro-level dynamics of dishonesty and corruption in the public sector.

Immigration, Ethnic Diversity and Political Outcomes: Evidence from Denmark

Scandinavian Journal of Economics, Oct. 2018
Link to: Published Paper, Working Paper, Appendix

I study the impact of immigration and increasing ethnic diversity on political outcomes in immigrant-receiving countries, focusing on immigration and election outcomes in Danish municipalities 1981-2001. A rich set of control variables isolates ethnic diversity effects from those of other immigrant characteristics and a novel IV strategy based on historical housing stock data addresses issues of endogenous location choices of immigrants. Increases in local ethnic diversity lead to right-ward shifts in election outcomes by shifting electoral support away from traditional "big government" left-wing parties and towards anti-immigrant nationalist parties in particular. These effects appear in both local and national elections.

Labor Supply of Politicians
(with R. Fisman, E. Kamenica and I. Munk)

Journal of the European Economic Association, Oct. 2015
Link to: Published Paper, Working Paper

Using data on Members of the European Parliament (MEPs), we examine the impact of salaries on the composition and the behavior of legislators. Employing a differences-in-differences approach, we exploit the introduction of a law that equalized MEPs’ salaries which had previously differed by as much as a factor of ten. Increasing salaries raises the fraction of MEPs who run for reelection but decreases the quality of elected MEPs (proxied by college quality). Salary has no discernible impact on effort or legislative output. Higher salaries induce more political competition.

Working Papers:

Is Parental Leave Costly for Firms and Coworkers?
(with A. Brenøe, S. Canaan and H. Royer)

First version: Nov. 2017, Latest version: Jul. 2018
Link to: Working Paper

The recent rise in female labor force participation presents new challenges for public policy. New mothers may want or need to leave the labor force temporarily to take care of their newborns. To ease this transition and encourage women to return to work, most countries have adopted parental leave policies that typically replace lost income due to temporary labor force exit and provide job protection. As of yet, much of the existing evidence on the effectiveness of such policies comes from studies that focus on their impacts on affected families - i.e., mothers, fathers, and their children without a clear understanding of the effects on firms and co-workers.

We use Danish administrative data linking the universe of firms, workers and births to fill this gap in the literature. We evaluate the impact on firms and co-workers of an additional woman giving birth in an environment with a generous leave policy. We utilize a dynamic difference-in-difference design that leverages the timing of a woman's leave and matches women who give birth in a particular year with women who do not give birth in that year. We argue that while the timing of a woman's childbearing may be endogenous to her own outcomes, the timing is likely less endogenous from the firm's perspective because a firm is composed of many employees. We rule out this concern that the timing of birth is endogenous from the firm's point of view via the examination of firm-level trends prior to the birth. Firms respond to leave-taking by increasing employment via hiring additional temporary employees and slightly increasing work hours of existing employees. Total hours are unchanged with only slight adjustments to workforce composition. The firm's total wage bill increases but once we account for the reimbursements that firms receive for leave payments, the total wage bill is unaffected. We observe no effect on the unemployment risk of existing employees, firm output, gross profits or firm closures. Overall, our estimates suggest that the costs of parental leave on firms and coworkers are small at best.

Are Workers Better Matched in Large Labor Markets?

Working Paper. First version: Nov. 2012, Latest version: Feb. 2015
Link to: Working Paper

This paper examines the relationship between labor market size and job search outcomes. Much research and many policy initiatives assume that larger labor markets lead to better job search outcomes because they give workers and firms more choice in potential jobs or employees. The empirical finding that labor market size and job finding rates are uncorrelated, however, has led researchers to question this assumption. I show, theoretically and empirically, that large labor markets may cause workers to find jobs that are better matches given their individual skills and characteristics, even if they do not cause workers to find jobs faster. I construct a unique new data set from Denmark that combines administrative data, an online vacancy database and detailed geographical information. I show that workers in large labor markets find jobs for which they are a better match as measured by both previous industry experience and geographical location. They also find jobs which pay higher wages and result in longer employment spells even after controlling for spatial productivity differences among firms. The estimated effects imply that labor market size explains 6.6% of the spatial variation in wage premia, and also suggest a high rate of return on transport infrastructure projects that increase the effective size of labor markets by increasing workers' ability to commute to distant jobs.

A Formal Model of Corruption, Dishonesty and Selection into Public Service
(with S. Barfort, A. Leth Olsen and F. Hjorth)

Working Paper. First version: Sept. 2015
Link to: Working Paper

Recent empirical studies have found that in high corruption countries, inherently more dishonest individuals are more likely to want to enter into public service, while the reverse is true in low corruption countries. In this note, we provide a simple formal model that rationalizes this empirical pattern as the result of countries being stuck in different self-sustaining equilibria where high levels of corruption and negative selection into public service are mutually reinforcing.

Fundamentals and Optimal Institutions:
The case of US sports leagues
(with Martin Gonzalez-Eyras and Martin Rossi)

Working Paper. First version: Jan. 2017, Latest version: June 2018
Link to: Working Paper

Why do countries, firms or other economic entities have different institutions? Do these differences reflect a combination of random chance and path dependence, or do they reflect optimal responses to differences in underlying fundamentals? To shed light on the relation between fundamentals and adopted institutions we examine institutional choice across the ``Big Four'' US sports leagues. Despite having very similar business models and facing the same economic and legal environment, these leagues exhibit large differences in their use of regulatory institutions such as revenue sharing or salary caps. We show, theoretically and empirically, that these differences can be rationalized as optimal responses to differences in one fundamental characteristic of the sports being played: how strongly win probabilities respond to hired talent. Our results provide a cautionary tale against trying to transplant successful institutions across settings.

Work in Progress:

The Reallocation of Workers across the Business Cycle
(with S. Caldwell, D. le Maire and F. Groes)

Government Architecture and Political Selection
(with S. Barfort, D. Lassen and S. Serritzlew)

Pushing the Data Frontier in Labor Market Matching
(with D. le Maire and F. Groes)

Mismatch, Matching and the Allocation of Workers to Jobs
(with D. le Maire and F. Groes)

Gender Gaps and Job Search Behavior
(with F. Fluchtmann, A. Glenny and J. Maibom )

Helping the Unemployed through Statistical Prediction?
(with R. Mahlstedt and M. Rasmussen)

Different Types of Peers
(with A. Bjerre-Nielsen and D. Lassen)