YEP Mini Course – Marco Pagano (University of Naples Federico II)

YEP Mini Course with Marco Pagano on “Risk Sharing within the Firm”


This Event is open for all PhD students of the BGSE and CGS as well as for all postdocs of the Universities of Bonn and Cologne.


On October 4, 2021, Prof. Marco Pagano, Ph.D., will hold a lecture on “Risk Sharing within the Firm”. He is a Professor of Economics and Finance at the Department of Economics and Statistics of the University of Naples Federico II. His research focus lie on corporate finance, law and finance and market microstructure as well as banking and macroeconomics.

Labor income risk is key to the welfare of most people. This risk is mainly insured “within the firm” and by public institutions, rather than by financial markets. The lecture will start by asking why such insurance is provided within the firm, and what determines its boundaries. It will identify four main constraining factors: availability of a public safety net, moral hazard on the employees’ side, moral hazard on the firms’ side, and workers’ wage bargaining power. These factors explain three empirical regularities: (i) family firms provide more employment insurance than nonfamily firms; (ii) the former pay lower real wages, and (iii) firms provide less employment insurance where public unemployment benefits are more generous.

We will then turn to explore the connection between risk sharing and firms’ capital structure: greater leverage calls for high wages to compensate employees for greater job risk; nevertheless, firms may want to lever up strategically in order to offset the bargaining power of labor unions. Hence, the distributional conflict between shareholders and workers may limit risk sharing within the firm. By contrast, bondholders and workers are not necessarily in conflict, as both are harmed by firms’ risk-taking. In principle, firms may also insure employees against uncertainty about their own talent, but their capacity to do so is constrained by workers’ inability to commit to their employer: in the presence of labor market competition, high-talent employees will leave unless paid in line with their high productivity, making uncertainty about talent uninsurable. The lecture will conclude by showing that risk sharing within firms has declined steadily in the last three decades, and by discussing the financial, competitive, technological and institutional developments that may have conjured this outcome.


Further Details:

Time: 10:15 – 11:45 and 13:00 – 14:30

Venue: tba

This Event is open for PhD students of the BGSE and CGS as well as for postdocs of the Universities of Bonn and Cologne. Other interested researchers from the two universities are also welcome to attend.

Please note the following important information:

To book the venue, we have to follow different procedures of the university’s administration depending on the number of participants. Should more than 20 people participate, we would need an individual hygiene and protection concept and risk assessment as well as the approval of the office for occupational safety (Arbeitsschutz), the event management (Veranstaltungsmanagement),  the legal department (Justitiariat) and the provost (Universitätskanzler).

Due to these necessities, I apologize for the short notice of the request and that a subsequent registration will probably not be possible.

Should there be only 11 people who want to participate, we can easily use our conference room in the Niebuhrstraße 5.

Finally, should you have registered for the event, but cannot attend, please notify me s.t. we can better estimate the number of participants. Many thanks!


On October 5, 2021, from 10:00 to 12:15 Marco Pagano will also give one-to-one mentoring advice for advanced Ph.D. students in this area. As there are limited spots available, we ask you politely to send a short email stating your motivation to me until Sunday, August 29.

The time slots (CET) will be as follows. You are welcome to state your preferred time slots and we will try our best to meet your needs, however, please keep in mind that we cannot guarantee your preferred time.

10:00 – 10:30 | 10:35 – 11:05 | 11:10 – 11:40 | 11:45 – 12:15

Causal Inference

04.10. - 05.05.2021

Young Econtribute Program

University of Bonn


Tim Bock

Research Manager