Nikolaj A. Harmon, Associate 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)

AEJ: Economic Policy, Nov. 2019
Link to: Published version, 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)

AEJ: Applied Economics, Oct 2019
Link to: Published version, 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)

J. of Public Administration Research and Theory, Oct. 2019
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:

The Gender Application Gap: Do Men and Women Apply for the Same Jobs?
(with A. Glenny, J. Fluchtmann and J. Maibom)

Working Paper. First version: Aug. 2019, Latest version: May 2020

Link to: Working Paper
Men and women tend to hold very different jobs. To what extent are these differences present already in the types of jobs men and women apply for? Using novel administrative data on job applications made by the universe of Danish UI recipients, we provide first evidence on gender differences in job applications. Across a range of job characteristics, including firm type, we document substantial differences in the types jobs men and women apply for. These gender application gaps exist even among men and women with the same labor market observables and closely mirror gender gaps in actual hiring outcomes. In particular, women tend to apply for jobs that pay systematically lower wages. Applying a standard decomposition method, we find that gender differences in applications are capable of explaining more than 70 percent of the wage gap among men and women with the same labor market observables. We finally provide suggestive evidence on why men and women are applying to such different jobs. We find little evidence that men or women are systematically applying to different jobs because they are responding to discrimination or other gender differences in the likelihood of being hired. Instead, the data suggest that men and women target different jobs because they have different valuations of non-wage job characteristics. Besides targeting jobs with lower wages, women are systematically applying more to part time jobs, jobs with shorter commutes and jobs at family-friendly firms.

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

NBER Working Paper #17726, Jan. 2020

First version: Nov. 2017, Latest version: May 2020
Link to: NBER Working Paper, Working Paper

Most existing evidence on the effectiveness of family leave policies comes from studies focusing on their impacts on affected families - mothers, fathers, and their children - without a clear understanding of the costs and effects on firms and coworkers. We estimate the effect of a female employee giving birth and taking parental leave on small firms and coworkers in Denmark. Using a dynamic difference-in-differences design, we compare small firms in which a female employee is about to give birth to an observationally equivalent sample of small firms with female employees who are not close to giving birth. Identification rests on a parallel trends assumption, which we substantiate through a set of natural validity checks. We find little evidence that parental leave take-up has negative effects on firms and coworkers overall. Specifically, after accounting for wage reimbursements received by firms offering paid leave, there are no measurable effects on firm output, labor costs, profitability or survival. Coworkers of the woman going on leave see temporary increases in their hours, earnings, and likelihood of being employed but experience no significant changes in well-being at work as proxied by sick days. These limited effects of parental leave reflect that most firms are very effective in compensating for the worker on leave by hiring temporary workers and by increasing other employees’ hours. In contrast, we do find evidence that parental leave has negative effects on a small subsample of firms that are less able to use their existing employees to compensate for an absent worker.

Outside Options, Bargaining and Wages: Evidence from Coworker Networks
(with S. Caldwell)

Working Paper. First version: Nov. 2019, Latest version: Jan. 2019
Link to: Working Paper

This paper analyzes the link between wages and outside employment opportunities. To overcome the fact that factors that affect a worker’s outside options may also impact her pro- ductivity at her current job, we develop a strategy that isolates changes in a worker’s information about her outside options. This strategy relies on the fact that individuals often learn about jobs through social networks, including former coworkers. We implement this strategy using employer-employee data from Denmark that contain monthly information on wages and de- tailed measures of worker skills. We find that increases in labor demand at former coworkers’ current firms lead to job-to-job mobility and wage growth. Consistent with theory, larger changes are necessary to induce a job-to-job transition than to induce a wage gain. Specification tests leveraging alternative sources of variation suggest these responses are indeed due to information rather than unobserved demand shocks. Impacts on earnings are concentrated among workers in the top half of the skill distribution. Finally, we use our reduced-form estimates to identify a structural model that allows us to estimate bargaining parameters and investigate the relevance of wage posting and bargaining across different skill groups.

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: Jan 2020
Link to: Working Paper

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 in part 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 thus show evidence that in professional sports existing institutions are tailored to fundamentals.

Work in Progress:

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

The Dynamics of Job Search in Unemployment
(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)