Does Your Class Give More than a Hint of Your Lifetime Earnings?: Assessing Indicators for Lifetime Earnings Over the Life Course for Sweden

Abstract

From a sociological stratification perspective, we would expect occupationally based measures to be valid proxies for lifetime earnings, but recent research suggests that annual earnings outperform occupational measures. In this article, we examine how class, occupation, education, and annual earnings are associated with lifetime earnings across almost complete working lives, at ages of around 20–65 years for Swedish cohorts born in the 1940s. Our results indicate that while annual earnings are considerably more accurate proxies for the lion’s share of working life, occupational measures are as expected more stable and somewhat better at the start and end of working lives. Our results also support the idea that micro-classes are better proxies of lifetime earnings than big classes. Contrary to some previous research, occupational measures perform better for women than for men in this respect, and occupational measures are better than education. Our main conclusions are that proxies for lifetime earnings have life-cycle biases that should be considered in, for instance, analyses of intergenerational mobility, and that occupationally based measures are more stable than annual earnings but, overall, are not very valid as indicators of lifetime earnings compared to annual earnings.

Firms and the Intergenerational Transmission of Labor Market Advantage

“…Earnings are appealing as a relatively final indicator of labor market success, being a consequence rather than a cause of labor market position (Mood, 2017). Sociological debate on occupational stratification has, at least in part, judged alternative indices by how well they predict earnings (Goldthorpe and McKnight, 2006;Kim et al, 2018;Shahbazian and Bihagen, 2022). We study earnings rather than income as earnings have a clear link to employers, and focus on fathers as the main breadwinner in the parental generation.…”

Income and Wealth as Salient Gradational Aspects of Stratification

“…For example, Bloome and Furey (2020) show intra-and intergenerational income mobility dynamics equalize lifetime income much more than characteristics of occupations. Kim and colleagues (2018) are similar to Brady and colleagues (2018), but analyze individual permanent earnings rather than HH permanent income (also Shahbazian and Bihagen 2022). They demonstrate that cross-sectional short-term earnings outperforms occupation-based social class and fine-grained occupation.…”

Subjective social class has a bad name, but predicts life chances well

“…We estimate linear regressions on income and wealth, both with and without controls for age, gender and household size (for household outcomes). The substantial conclusions remain unchanged by the control variablesand we therefore follow the design of earlier studies (Brady et al, 2018;Shahbazian & Bihagen, 2022) and concentrate on the models without controls in the main text (for results with controls, see Figs. B1-B4 in Appendix B).…”

“…For each country, we report the adjusted R2 for either subjective or objective class. R2 is a widely used summary measure of predictive power in models accounting for income (Brady et al, 2018;Shahbazian & Bihagen, 2022). While there are more sophisticated measures of explained variation, these measures tend to be closely correlated with R2 (Cantoni et al, 2021), and R2 has the advantage of easy interpretation.…”