Workers often earn well early in their careers but are at higher risk of unemployment later in life, which affects lifetime earnings. Photo: Sandnes1970
 

Sociological research often assumes that a person's social class (based on occupation) is a good predictor of their lifetime earnings. Now, researchers from the Swedish Institute for Social Research (SOFI) at Stockholm University have studied various factors that influence people's lifetime earnings, and the results suggest that class position is not the best predictor.

"What we can see is that a person's annual earned income generally has a much stronger relationship with lifetime earnings compared to their class in at the same year. And this is true for both women and men", said Erik Bihagen, Professor of Sociology at SOFI at Stockholm University and one of the authors of the study.

Erik Bihagen, professor at the Swedish Institute for Social Research (SOFI)

The researchers uses information in the administrative register on earned income over a lifetime, which many previous studies are unable to do. The results show that class has a slightly stronger relationship with lifetime earnings for those at the beginning of their career and for those at the end of their career, but overall the relationship is rather weak.

"For example, a person in an occupation requiring higher education, what in class terms might be termed as service-class, is expected to have a good earnings performance. A person who instead has a working-class job may earn relatively well at a young age compared to other young people, but is expected to have poorer earnings and higher unemployment risks. If such assumptions were generally true, class affiliation at a specific year, and especially at the beginning of a career, should have a much stronger relationship with lifetime earnings than earnings in the same year. Our study shows that this does not seem to be the case", said Erik Bihagen.

The study shows that only during a short period of working life is class a better measure of lifetime earnings than annual earnings: at the beginning, up to about age 28, and at the end, after about age 60, of working life. For most of the working life, annual income is significantly better as an indicator, according to the study

Roujman Shahbazian, researcher in sociology at the Swedish Institute for Social Research (SOFI)

"As we see it, these results contradict the view that class captures lifetime earnings well. Admittedly, class is a slightly better indicator for women than men, but the overall result: that class is a worse indicator than annual earnings persists", said Roujman Shahbazian, a researcher at Munich's Ludwig Maximilian University and SOFI and co-author of the study.

Wide spread of income within groups with similar educations

"The relatively weak relationship between class, and indeed education, and lifetime earnings may be due to the fact that careers are less predictable than is often thought, or that there is a wide dispersion of earnings within groups with similar education and class. But the fact that annual earnings still capture lifetime earnings quite well, as previous research also shows, still strongly suggests limited income mobility from somewhere in the mid-30s", said Roujman Shahbazian.

The researchers argue that contemporary class theory places too much emphasis on the assumption that class is a good measure of lifetime earnings, where social class is primarily intended to capture long-term and life-course economic status.

"For many sociologists, this is an important reason for taking an interest in class. Rather, we should go back to the original idea and map how a broader set of work-related advantages and disadvantages are linked to occupational groups", argues Erik Bihagen.

"However, the optimal approach for many researchers interested in economic inequality would be to measure lifetime earnings with detailed lifetime earnings data, but this is impractical in most studies. In the absence of such information, our study shows that it is generally better to use annual earnings rather than class to capture economic inequality from a lifetime perspective", said Roujman Shahbazian.
 

Read more about the research

Shahbazian, R. and Bihagen, E. "Does your class give more than a hint about your lifetime earnings?": Assessing indicators for lifetime earnings over the life course for Sweden", European Sociological Review.

Contact

Roujman Shahbazian, doktor i sociologi
Institutet för social forskning (SOFI)
Stockholms universitet
E-post: roujman.shahbazian@sofi.su.se