IDEAS home Printed from
   My bibliography  Save this article

Stocasthic frontiers and wage inefficiency in Venezuela


  • Pedro Harmath

    () (Universidad Centroccidental Lisandro Alvarado, Decanato de Ciencias y Tecnología, Departamento de Investigación de Operaciones y Estadística, Núcleo Obelisco, Avenida Las Industrias, Barquisimeto estado Lara, Venezuela.)

  • Josefa Ramoni

    () (Universidad de Los Andes, Facultad de Ciencias Económicas y Sociales, Departamento de Economía, Núcleo Liria, Edificio H, Piso 3, Mérida, estado Mérida, Venezuela.)


This paper analyzes wage inefficiency in Venezuela in 2006 based on the methodology of stochastic frontiers. Empirical results indicate that employers’ inefficiency is above 30%, while for employees inefficiency is not statistical significant. This can be explained by government role in the labor market and by the fact that employers may be paying efficiency wages to increase productivity.

Suggested Citation

  • Pedro Harmath & Josefa Ramoni, 2012. "Stocasthic frontiers and wage inefficiency in Venezuela," Economía, Instituto de Investigaciones Económicas y Sociales (IIES). Facultad de Ciencias Económicas y Sociales. Universidad de Los Andes. Mérida, Venezuela, vol. 37(33), pages 107-142, January-j.
  • Handle: RePEc:ula:econom:v:37:y:2012:i:33:p:107-142

    Download full text from publisher

    File URL:
    Download Restriction: no

    References listed on IDEAS

    1. Polachek, Solomon W & Yoon, Bong Joon, 1996. "Panel Estimates of a Two-Tiered Earnings Frontier," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 11(2), pages 169-178, March-Apr.
    2. Polachek, Solomon W & Yoon, Bong Joon, 1987. "A Two-tiered Earnings Frontier Estimation of Employer and Employee Information in the Labor Market," The Review of Economics and Statistics, MIT Press, vol. 69(2), pages 296-302, May.
    3. Juan Miguel VILLA LORA, 2006. "Propuesta para la estimación del salario de reserva de los empleados en Colombia con el análisis de fronteras estocásticas," ARCHIVOS DE ECONOMÍA 003402, DEPARTAMENTO NACIONAL DE PLANEACIÓN.
    4. Polachek, Solomon & Xiang, Jun, 2005. "The Effects of Incomplete Employee Wage Information: A Cross-Country Analysis," IZA Discussion Papers 1735, Institute for the Study of Labor (IZA).
    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)

    More about this item


    Stochastic frontiers; wages; labor market.;

    JEL classification:

    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • C50 - Mathematical and Quantitative Methods - - Econometric Modeling - - - General
    • J01 - Labor and Demographic Economics - - General - - - Labor Economics: General
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ula:econom:v:37:y:2012:i:33:p:107-142. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Alexis Vásquez). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.