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.