Karl Harmenberg

Karl Harmenberg

Associate professor

University of Oslo


I am a macroeconomist working as a (tenure-track) associate professor at the Department of Economics at the University of Oslo. My research focuses on micro behavior, macro dynamics, and inequality. I have a PhD in economics from the Institute for International Economic Studies, Stockholm University. I am also an adjunct researcher at BI Norwegian Business School, affiliated with HOFIMAR.


  • PhD, 2018

    IIES, Stockholm University


Working papers

Fiscal Stimulus Policies According to HANK-SAM
(with Tobias Broer, Jeppe Druedahl and Erik Öberg, draft coming soon!)

Integrated Epi-Econ Assessment: Quantitative Theory
(with Timo Boppart, John Hassler, Per Krusell and Jonna Olsson, conditionally accepted by Quantitative Economics)

Latest version, December 2023 NBER working paper, December 2020

We construct a framework for integrated epi-econ assessment: theory, calibration to micro-, macro-, and epi-data, and numerical methods for quantitative policy evaluation. The model has an explicit microeconomic, market-based structure. It highlights trade- offs, within period and over time, associated with activities that involve both valuable social interaction and harmful disease transmission. We compare market solutions with socially optimal allocations. Our calibration to covid-19 implies that households shift their leisure and work activities away from social interactions. This is especially true for older individuals, who are more vulnerable to disease. The optimal allocation may or may not involve lockdown and changes the time allocations significantly across age groups. In this trade-off, people’s social leisure time becomes an important factor, aside from deaths and GDP. We finally compare optimal responses to different viruses (SARS, seasonal flu) and argue that, going forward, economic analysis ought to be an integral element behind epidemiological policy.
The Unemployment-Risk Channel in Business-Cycle Fluctuations
(with Tobias Broer, Jeppe Druedahl and Erik Öberg, revision requested by the International Economic Review)

Latest version, October 2021 CEPR discussion paper, October 2021 Older version (with different title), July 2020

We quantify the unemployment-risk channel in business-cycle fluctuations, whereby an initial contractionary shock is amplified through workers reducing their demand in fear of unemployment. We document two stylized facts on how unemployment and unemployment risk respond to identified demand and supply shocks in US data. First, separation and job-finding rates play similar important roles in accounting for the overall unemployment response. Second, separations are more important early on, while job-finding rates respond with a lag. We show how a tractable heterogeneous-agent new-Keynesian model with a frictional labor market matches both facts once we include endogenous separations and sluggish vacancy creation. Relative to a model with exogenous separations and free entry, our framework attributes almost twice as large a share of output fluctuations to the inefficient unemployment-risk channel, and thus gives a larger role to stabilization policy.

Work in progress

Life-Cycle Earnings Dynamics at the Top: A Parsimonious Framework

The Dynamics of Unemployment and Hours with Rigid Wage Contracts


A Simple Theory of Pareto-Distributed Earnings
Economics Letters, vol. 234, January 2024, 111492.

Published version Final draft version

I introduce a simple model which endogenously generates a Pareto distribution in top earnings. Workers inhabit different niches, and the earnings of a worker is determined by the niche-specific supply of labor and a downward-sloping labor-demand curve. The highest paid workers are the ones that inhabit a niche with few other workers. A Pareto tail in earnings emerges as long as the labor-demand curve has a limit elasticity and the distribution of workers over niches satisfies a regularity condition from extreme-value theory, satisfied by virtually all continuous distributions in economics.
Macroeconomic Dynamics with Rigid Wage Contracts
American Economic Review: Insights, vol. 5(1), March 2023, pp. 55-72.

Published version Final draft version Online appendix Slides, Oct 2022

We adapt the wage contracting structure in Chari (1983) to a dynamic, balanced-growth setting with recontracting as in Calvo (1983). The resulting wage-rigidity framework dampens income effects in the short run, thus allowing significant responses of hours to aggregate shocks. In reduced form, the model dynamics are similar to that in Jaimovich and Rebelo (2009), with their habit parameter replaced by our probability of wage-contract resetting. That is, if wage contracts are reset frequently, labor supply behaves in accordance with King, Plosser, and Rebelo (1988) preferences, whereas if they are never reset, we obtain the setting in Greenwood, Hercowitz, and Huffman (1988).
Integrated Epi-Econ Assessment of Vaccination
Journal of Economic Dynamics and Control, vol. 140, July 2022, 104308.

Published version

Using an integrated epi-econ model, we compute the value of vaccines for Covid-19, both under a planner’s solution and in competitive equilibrium. The specific model, developed in Boppart, Harmenberg, Hassler, Krusell, and Olsson (2020), factors in not just value-of-life aspects along with standard economic variables but also the value of leisure activities that rely on a social component. We find that the societal value of vaccination is large; we estimate that, translated into monetary terms, the value of vaccinating one young individual in the competitive equilibrium is $17,800. Externalities are large: less than half the societal value is internalized by individuals (assuming that they act purely in their self-interest). Finally, behavioral responses are important, with a substantial share of the value of vaccines being attributed to people enjoying more socially-oriented leisure when more people are vaccinated.
Aggregating Heterogeneous-Agent Models with Permanent Income Shocks
Journal of Economic Dynamics and Control, vol. 129, August 2021, 104185.

Published version Final draft version Code Python notebook by Carroll and Velásquez-Giraldo

I introduce a method for simulating aggregate dynamics of heterogeneous-agent models where log permanent income follows a random walk. The idea is to simulate the model using a counterfactual permanent-income-neutral measure which incorporates the effect that permanent income shocks have on macroeconomic aggregates. With the permanent-income-neutral measure, one does not need to keep track of the permanent-income distribution. The permanent-income-neutral measure is both useful for the analytical characterization of aggregate consumption-savings behavior and for simulating numerical models. Furthermore, it is trivial to implement with a few lines of code.
Gender Disparities in Top Earnings: Measurement and Facts for Denmark 1980-2013
Journal of Economic Inequality, vol 19(2), June 2021, pp. 347-362.

Published version Final draft version Code

Extending the work of Atkinson et al. (2018), we decompose top-earnings gender disparities into a glass-ceiling coefficient and a top-earnings gender gap. The decomposition uses that both male and female top earnings are Pareto distributed. If interpreting top-earnings gender disparities as caused by a female-specific earnings tax, the top-earnings gender gap and glass-ceiling coefficient measure the tax level and tax progressivity, respectively. Using Danish data on earnings, we show that the top-earnings gender gap and the glass-ceiling coefficient evolve differently across time, the life cycle, and educational groups. In particular, while the top-earnings gender gap has been decreasing in Denmark over the period 1980-2013, the glass-ceiling coefficient has been remarkably stable.
Consumption Dynamics under Time-Varying Unemployment Risk
Journal of Monetary Economics, vol. 118, March 2021, pp. 350-365.
(with Erik Öberg)

Published version Final draft version

In response to an adverse labor-market shock, a calibrated heterogeneous-agent model predicts that aggregate spending on durable goods falls mainly due to the ex-ante increase in income uncertainty caused by higher unemployment risk. In contrast, aggregate spending on nondurable goods falls mainly due to the ex-post income losses associated with realized unemployment spells. When households hold little liquid assets, the nondurable spending response is amplified, whereas the durable spending response is dampened. These differences stem from micro-level adjustment frictions involved in purchases of durable goods. The model is corroborated with evidence from micro survey data.

Policy publications and discussions (not peer reviewed)

Comments on Markus Sigonius: Developments of automatic stabilisers in Sweden 1998–2022
Nordic Economic Policy Review 2024: Fiscal Policy in Uncertain Times, pp. 206-209.

Published version

Confronting Epidemics: The Need for Epi-Econ IAMs

Report for the National Institute of Economic Research, December 2020

We discuss what tools would be useful in confronting epidemics, especially from the perspective of economics. Our main proposal is for policymakers to employ “epi-econ IAMs”: explicit Integrated Assessment Models, where epidemiology is integrated with economics. These models are under rapid development, but arguably not yet quite ready for quantitative use.

Older drafts

The Labor-Market Origins of Cyclical Skewness

Latest version, 2017

I use Danish administrative data 1980-2013 to study the underlying mechanisms generating fluctuations in income-shock moments. I partition the population into 37 narrowly defined educational categories and document the cyclicality of labor-income shock moments for each category separately. For the individual educational categories, mean income growth is strongly correlated with income-growth skewness, with an average correlation of 0.87 − 0.88. The connection between income-growth skewness and mean income growth is not only strong in the time dimension, but also in the cross section. Across the 37 educational categories, the correlation between mean income growth and income growth skewness is 0.93 − 0.96. Labor-market frictions together with variations in productivity growth can generate the relationship between mean income growth and income growth skewness. In a quantitative job-ladder model, variations in productivity growth quantitatively capture both the time-series and cross-sectional relationship.
A Note: Assortative Mating and Income Inequality

Latest version, 2014


  • I teach Economic Growth and parts of Macroeconomic Theory at the University of Oslo.
  • Here is a repository with some Python notebooks replicating some empirical results in macroeconomics/growth (and solving a Ramsey-Cass-Koopmans model).
  • Just for fun: my favorite econometrics example is my dad.