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In-work income stochastic frontiers: methodological advances for income inequalities investigations

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  • Graziella Bonanno
  • Filippo Domma

Abstract

This study examines the inefficiency in the income distribution for Italy employing the Stochastic Frontier Approach (SFA). By using data from the European Union Statistics on Income and Living Conditions (EU-SILC) survey for Italy in 2021, we estimate wage equations to show that recent methodological advances in the SFA better fit the distribution of in-work income. We find evidence of the presence of both dependence between the two error components of the income stochastic frontier and asymmetry of the accidental error.

Suggested Citation

  • Graziella Bonanno & Filippo Domma, 2025. "In-work income stochastic frontiers: methodological advances for income inequalities investigations," Regional Economy, , vol. 9, pages 3-13.
    • Handle: RePEc:atk:issues:q32025:10203
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    References listed on IDEAS

    as
    1. Graziella Bonanno & Filippo Domma, 2022. "Analytical Derivations of New Specifications for Stochastic Frontiers with Applications," Mathematics, MDPI, vol. 10(20), pages 1-17, October.
    2. Giorgio Brunello & Patricia Wruuck, 2021. "Skill shortages and skill mismatch: A review of the literature," Journal of Economic Surveys, Wiley Blackwell, vol. 35(4), pages 1145-1167, September.
    3. Domma, Filippo & Condino, Francesca & Giordano, Sabrina, 2018. "A new formulation of the Dagum distribution in terms of income inequality and poverty measures," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 511(C), pages 104-126.
    4. Graziella Bonanno & Filippo Domma & Lucia Errico, 2025. "Income Inequality and National Strategy for Inner Areas: Does Location Matter?," Journal of Regional Science, Wiley Blackwell, vol. 65(3), pages 718-740, June.
    5. Aigner, Dennis & Lovell, C. A. Knox & Schmidt, Peter, 1977. "Formulation and estimation of stochastic frontier production function models," Journal of Econometrics, Elsevier, vol. 6(1), pages 21-37, July.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

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    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • C31 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models; Quantile Regressions; Social Interaction Models
    • C18 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Methodolical Issues: General
    • C46 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Specific Distributions

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