Centre–periphery income bipolarization in Italy: evidence from municipal fiscal data, 2015–2022

Abstract This paper examines income bipolarization and inequality across Italian municipalities, focusing on the distributional divergence between urban centres and inner (peripheral) areas over the period 2015–2022. Using municipal-level fiscal declaration data from the Italian Ministry of Economy and Finance, merged with the National Strategy for Inner Areas classification and ISTAT demographic indicators, we apply the relative distribution framework of Handcock and Morris (1998, 1999) to characterise the full shape of income differences between territorial groups. This approach allows us to decompose distributional change into location and shape components and to construct relative polarization indices. We estimate the determinants of income bipolarization using Recentered Influence Function regressions applied to these indices, following Clementi and Fabiani (2025). Our analysis extends Gallo and Pagliacci (2020) in three key respects: we update the dataset through 2022, covering the COVID-19 pandemic period; we adopt an explicit bipolarization framework; and we introduce influence-function estimation for relative polarization indices at the municipal level. Results show that inner areas exhibit stronger and increasing lower-tail bipolarization compared to urban centres, driven primarily by demographic ageing and limited employment opportunities. Urban centres, despite higher average incomes, display greater instability in the lower portion of the distribution. These findings carry direct implications for place-based cohesion policies, particularly in the context of inner-areas policy and post-pandemic recovery.