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

Graziella Bonanno and Filippo Domma

Regional Economy, 2025, vol. 9, 3-13

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.

Keywords: income stochastic frontiers; wage; Dagum distribution. (search for similar items in EconPapers)
JEL-codes: C18 C31 C46 D31 D63 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:atk:issues:q32025:10203

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