the project

The recent financial crisis and the subsequent recession have caused massive worker layoffs throughout the world. This has sparked an intense, often ideologically polarized debate between those who consider finance as socially harmful and those who view it as an efficient allocation machine. The FINLAB project aims to contribute a more dispassionate analysis of the interactions between finance and labor, and of the costs and benefits of the financial system for society, and in particular for workers. The project aims to address questions like: how does financial market development affect the level of employment and wages, and the risk of unemployment? How does the design of financial regulation affect such risk? Do family and non-family firms differ in protecting their employees against shocks to employment and wages? The project also investigates how the behavior of employees and labor market institutions in turn affect the way companies are run. For instance, does the bargaining power of unions and the legal protection of employees in bankruptcy affect the leverage chosen by firms? Can competition in the market for managers increase risk taking by firms in the finance industry? This website provides news about progress made on these issues by the FINLAB research team, such as new papers produced, conferences and seminars organized within the project, as well as other interesting material produced by other researchers on these issues.


Marco Pagano principal investigator
University of Naples Federico II

Andrew Ellul Senior researcher
Kelley School of Business, Indiana University

Tullio Jappelli Senior researcher
University of Naples Federico II

Giovanni Pica Team member
University of Salerno

Fabiano Schivardi Senior researcher

Roberto Nisticò Junior Researcher
University of Naples Federico II

Stefania Maddaluno Project administrator
University of Naples Federico II

Annalisa Scognamiglio Junior Researcher
University of Naples Federico II

Dimitrios Christelis Senior Researcher

Luca Picariello Junior Researcher
Norwegian School of Economics (NHH)

Joe Anthony Hasell Research Assistant
University of Naples Federico II

Luigi Pollio Research Assistant
University of Salerno

Lorenzo Trimarchi Research Assistant
Université libre de Bruxelles

Work in progress

Marco Pagano, Luca Picariello, Talent Discovery, Layoff Risk and Unemployment Insurance, In talent intensive jobs, workers’ performance is informative about their quality, allowing higher productivity and expected wages. But such learning also implies greater layoff risk. Firms can insure employees against such risk by providing severance pay, if workers cannot resign from their employers. This implements both efficient production and risk sharing. When instead workers can resign, private insurance can no longer be provided, and more risk-averse workers will choose less informative jobs. This lowers expected productivity and wages. Public provision of unemployment insurance corrects this inefficiency, enhancing employment in talent-sensitive industries. This efficiency gain cannot be obtained by forbidding layoffs. July 2017.


Andrew Ellul, Marco Pagano, Annalisa Scognamiglio, Career Risk and Market Discipline in Asset Management, forthcoming in the Review of Financial Studies, We establish that the labor market helps discipline asset managers via the impact of fund liquidations on their careers. Using hand-collected data on 1,948 professionals, we -find that top managers working for funds liquidated after persistently poor relative performance suffer demotion coupled with a signi-ficant loss in imputed compensation. Scarring effects are absent when liquidations are preceded by normal relative performance or involve mid-level employees. Seen through the lens of a model with moral hazard and adverse selection, these scarring effects can be ascribed to a drop in asset managers’ reputation. The -findings suggest that performance-induced liquidations supplement compensation-based incentives. March 2019. Paper

Andrew Ellul, Marco Pagano, Corporate Leverage and Employees’ Rights in Bankruptcy, forthcoming in the Journal of Financial Economics, Corporate leverage responds differently to employees’ rights in bankruptcy depending on whether it is driven by strategic concerns in wage bargaining or by credit constraints. Using novel data on employees’ rights in bankruptcy, we estimate their impact on leverage, exploiting time-series, cross-country and firm-level variation in the data. For financially unconstrained firms, results accord with the strategic debt model: leverage increases more in response to rises in corporate property values or profitability if employees have strong seniority in liquidation and weak rights in restructuring. Instead, in financially constrained firms leverage responds less to these shocks if employees have stronger seniority. March 2019. Paper

Viral Acharya, Marco Pagano, Paolo Volpin, Seeking Alpha: Excess Risk Taking and Competition for Managerial Talent, Editor’s Choice, Review of Financial Studies, Vol. 29, No.10, 2565-2599, We present a model where firms compete for scarce managerial talent (“alpha”) and managers are risk-averse. When managers cannot move across firms after being hired, employers learn about their talent, allocate them efficiently to projects and provide insurance to low-quality managers. When instead managers can move across firms, firm-level coinsurance is no longer feasible, but managers may self-insure by switching employer to delay the revelation of their true quality. However this results in inefficient project assignment, with low-quality managers handling projects that are too risky for them. June 2016. Slides: Presentation_Alpha_June_2015

Andrew Ellul, Marco Pagano, Fabiano Schivardi, Employment and Wage Insurance within Firms: Worldwide Evidence, Review of Financial Studies, forthcoming, If unemployment insurance is more generous, workers should demand less implicit insurance from their employers: firm- and government-provided insurance should be substitutes. Using a firm-level international panel dataset, we investigate this hypothesis exploiting cross-country and time-series variation in public unemployment insurance as a shifter of workers’ demand for insurance within firms, and family vs. non-family ownership as a shifter of firms’ supply of insurance. We find that employment stability in family firms is greater, and the wage discount larger, in countries with more generous public unemployment insurance, while no such substitutability is present for non-family firms. August 2015. Slides: EFA Presentation_August_2015

Marco Pagano, Finance: Economic Lifeblood or Toxin?, edited by Viral Acharya, Thorsten Beck, Douglas Evanoff, George G. Kaufman, and Richard Portes. World Scientific Publishing Co. Pte. Ltd, Chapter 8 in The Social Value of the Financial Sector: Too Big to Fail or Just too Big?, New Jersey, pp. 109-146, In the past two decades, academic research has produced massive evidence of the beneficial role of financial development for growth and the allocation of investment. Our current vision, however, is dominated by instances of dysfunctional behavior of financial markets associated with acute and widespread crises. This raises the issue of when and why finance ceases to be the “lifeblood” and turns into a “toxin” for real economic activity. This paper is a first step towards an answer. Its thesis is that the metamorphosis occurs when finance becomes “too large” relative to the underlying economy. At this point finance stops contributing to economic growth and comes to threaten the solvency of banks and systemic stability. A related question is why regulation is not designed so as to prevent the financial industry from growing above this threshold. I argue that the answer lies largely in the symbiosis between politicians and the finance industry. April 2013. Chicago_Fed_Pagano_slides

Marco Pagano, Giovanni Pica, Finance and Employment, Economic Policy, Vol. 27, No. 69, How does finance affect employment and inter-industry job reallocation? We present a model that predicts that financial development (i) increases employment and/or labour productivity and wages, with a smaller impact at high levels of the equilibrium wage and financial development; (ii) may induce either more or less reallocation of jobs depending on whether shocks to profit opportunities or to cash flow predominate; (iii) amplifies the output and employment losses in crises, firms that rely most on banks for liquidity being hit the hardest. Testing these predictions on international industry-level data for 1970–2003, we find that standard measures of financial development are indeed associated with greater employment growth, although only in non-OECD countries, and are not correlated with labour productivity or real wage growth. Moreover, they correlate negatively with inter-industry dispersion of employment growth. Finally, there is some evidence of a ‘dark side’ of financial development, in that during banking crises employment grows less in the industries that are more dependent on external finance and those located in the more financially developed countries. January 2012. Pgano_Pica_Panel_Short

Conferences at CSEF

8 September 2016 – 9 September 2016
“Mario Cacace” Multimedia Center, Via Giuseppe Orlandi, Anacapri (Capri), Italy
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Pictures from 1 to 6IIIPictures from 7 to 14IIIPictures from 15 to 20IIIPictures from 21 to 27

28 August 2015 – 30 August 2015
EIEF - Via Sallustiana, 62 - Rome
The event has been organized by the CSEF jointly with Einaudi Institute for Economics and Finance​ (EIEF) and the Stanford Institute for Theoretical Economics at Stanford University (SITE). This event has been funded by the ERC.
Download Program III Conference Session Descriptions

24 June 2013 – 28 June 2013
1st CSEF Conference on Finance and Labor
Centro Internazionale per la Cultura Scientifica “Villa Orlandi”, Anacapri (NA)
view and download conference’s program
Conference Session Descriptions

Seminars at CSEF

Tuesday, 26 April 2016 – h. 13
Brian Bell (University of Oxford)
Minimum Wages and Firm Value (joint with Stephen Machin)
Download pdf

Tuesday, 21 January 2014 – h. 11
Claire Célérier (University of Zurich)
Are Bankers Worth Their Pay? Evidence from a Talent Measure with Boris Vallée
CSEF Seminar
download pdf

Tuesday, 29 October 2013 – h. 13
Pietro Garibaldi (University of Turin)
Labor and Finance: Mortensen and Pissarides meet Holmstrom and Tirole Tito Boeri and Espen R. Moen
CSEF Seminar
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Thursday, 13 June 2013 – h. 15
(21st Mitsui Finance Sympisium on Labor and Finance)
Employment and Wage Insurance within Firms: Worldwide Evidence
Marco Pagano presented the paper “Employment and Wage Insurance within Firms: Worldwide Evidence” (joint with Andrew Ellul and Fabiano Schivardi), and Andrew Ellul discussed the paper “Cost Shifting and the Freezing of Corporate Pension Plans” (by Joshua Rauh, Irina Stefanescu and Stephen Zeldes) at the conference held at the Ross School of Business, Michigan University

Tuesday, 26 February 2013 – h. 13
Salvatore Morelli (Oxford University)
Banking Shocks and Top Income Shares
CSEF Job Market Seminar
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Outside presentations

Wednesday, 29 June 2016
Presentation at MIT
Seminar Corporate Leverage and Employees’Rights in Bankruptcy (joint with Andrew Ellul)
By Marco Pagano

Friday, 6 May 2016
Presentation at Collegio Carlo Alberto - 2016 Vilfredo Pareto Lecture
Keynote Lecturer Employment and Wage Insurance within Firms
By Marco Pagano

Thursday, 5 November 2015
Presentation at University of Graz - Workshop on Accounting, Information, and Financial Crises
Conference presentation Financial Disclosure and Market Transparency with Costly Information Processing
By Marco Pagano

Tuesday, 20 October 2015
Presentation at ETH Zurich - Workshop and Lecture Series in Law & Finance
Conference presentation Employees’ Rights in Bankruptcy
By Marco Pagano

Tuesday, 6 October 2015
Presentation at University of New South Wales
Seminar Strategic Leverage and Employees’ Rights in Bankruptcy​ (joint with Andrew Ellul)
By Marco Pagano

Saturday, 22 August 2015
Presentation at Vienna University of Economics and Business - 42nd EFA Annual Meeting
Conference presentation Employment and Wage Insurance within Firms: Worldwide Evidence (joint with Andrew Ellul and Fabiano Schivardi)
By Marco Pagano

Friday, 24 July 2015
Presentation at Fundacao Getúlio Vargas (FGV/EESP) - Brazilian Meeting of Finance, São Paulo
Keynote Lecturer Strategic Leverage and Employee Protection in Bankruptcy
By Marco Pagano

Friday, 5 June 2015
Presentation at Stanford Law School - Conference on "Global Corporate Governance Colloquia"
Conference presentation Seeking Alpha: Excess Risk Taking and Competition for Managerial Talent (joint with Viral Acharya and Paolo Volpin)
By Marco Pagano

Tuesday, 26 August 2014
Presentation at Stanford University - SITE Conference on "Interrelations between Financial and Labor Markets"
Conference presentation Employment and Wage Insurance within Firms: Worldwide Evidence (joint with Andrew Ellul and Fabiano Schivardi)
By Marco Pagano

Monday, 16 December 2013
Presentation at Bar-Ilan University - Ackerman Corporate Governance Conference
Conference presentation Seeking Alpha: Excess Risk Taking and Competition for Managerial Talent (joint with Viral Acharya and Paolo Volpin)
By Marco Pagano

Monday, 14 October 2013
Presentation at Australian Graduate School of Management (University of New South Wales) - FIRN Corporate Finance Workshop
Keynote Lecturer Finance and Labor: An Overview
By Marco Pagano

Tuesday, 1 October 2013
Presentation at Chinese University of Hong Kong, Hong Kong University of Science and Technology, Nanyang Technological University, National University of Singapore, Shanghai Advanced Institute of Finance, Singapore Management University
Seminar Employment and Wage Insurance within Firms: Worldwide Evidence (joint with Fabiano Schivardi)
By Marco Pagano and Andrew Ellul


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