Karl Harmenberg

Karl Harmenberg

Postdoctoral fellow

BI Norwegian Business School


I am a postdoctoral fellow at the Department of Economics, BI Norwegian Business School. My research focuses on micro behavior, macro dynamics, and inequality.

I received my PhD in economics from the Institute for International Economic Studies, Stockholm University in 2018. Previously, I worked at the Department of Economics, Copenhagen Business School.


  • Macroeconomics
  • Inequality


  • PhD, 2018

    IIES, Stockholm University



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.

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.

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

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.

Working papers

Macroeconomic Dynamics with Rigid Wage Contracts

First version, November 2021

We adapt the wage contracting structure in Chari (1983) to a dynamic, balanced-growth setting with re-contracting à la Calvo (1983). The resulting wage-rigidity framework delivers a model very 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 can be reset very frequently, labor supply behaves in accordance with King et al. (1988) preferences, whereas if they are sticky for a long time, we obtain the setting in Greenwood et al. (1988), thus allowing significant responses of hours to wage changes.

The Unemployment-Risk Channel in Business-Cycle Fluctuations

Latest version, October 2021 CEPR discussion paper, October 2021

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.

Integrated Epi-Econ Assessment

First version, December 2020 NBER working paper, December 2020

We formulate an economic time use model and add to it an epidemiological SIR block. In the event of an epidemic, households shift their leisure time from activities with a high degree of social interaction to activities with less, and also choose to work more from home. Our model highlights the different actions taken by young individuals, who are less severely affected by the disease, and by old individuals, who are more vulnerable. We calibrate our model to time use data from ATUS, employment data, epidemiological data, and estimates of the value of a statistical life. There are qualitative as well as quantitative differences between the competitive equilibrium and social planner allocation and, moreover, these depend critically on when a cure arrives. Due to the role played by social activities in people's welfare, simple indicators such as deaths and GDP are insufficient for judging outcomes in our economy.

A Simple Theory of Pareto Earnings

CBS working paper, December 2020

I introduce a simple model which endogenously generates a Pareto distribution in top earnings, consistent with empirics. Workers inhabit different niches, and the earnings of a worker is determined by the niche-specific supply of labor and a constant-elasticity 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 distribution of workers over niches satisfies a regularity condition from extreme-value theory, satisfied by virtually all continuous distributions in economics.

The Labor-Market Origins of Cyclical Skewness

(R&R at the International Economic Review, previously circulated as Harmenberg and Sievertsen)

Latest version, November 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.

Policy publications (not peer reviewed)

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 note

A Note: Assortative Mating and Income Inequality

Latest version, 2014


At Copenhagen Business School, I taught Advanced Macroeconomics and The Philosophy and Economics of Inequality in the 21st Century. The syllabus from the last time I taught the latter course is here. See here for a syllabus for a reading group on macroeconomic policy from fall 2020.

Just for fun: My favorite Nobel laureate econometrics example is my dad.