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Social class and earnings: a cross-national study

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  • Nolan, Brian
  • Weisstanner, David
  • Goedemé, Tim
  • Paskov, Marii

Abstract

In sociology and political science, social class is among the most commonly used indicators of command over economic resources. However, we know relatively little about how the nature of the relationship between social class and earnings varies across countries. In this paper, we utilize data from the European Union Statistics on Income and Living Conditions (EU-SILC) to study the relation between social class and earnings inequality across 30 European countries. We find that while working-class individuals have lower average earnings than their upper-class counterparts in all countries, there is considerable variation across countries in the earnings ratios. Class also contributes to overall earnings inequality. However, by using a variation of the Oaxaca-Blinder decomposition, we show that a sizeable share of between-class inequality can be accounted for by differences in the population composition of social classes. In sum, our results reveal that there is a non-negligible relationship between class and earnings, but the magnitude of class inequality, and how much class accounts for overall inequality, differs substantially across countries.

Suggested Citation

  • Nolan, Brian & Weisstanner, David & Goedemé, Tim & Paskov, Marii, 2020. "Social class and earnings: a cross-national study," INET Oxford Working Papers 2020-03, Institute for New Economic Thinking at the Oxford Martin School, University of Oxford.
  • Handle: RePEc:amz:wpaper:2020-03
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    File URL: https://www.inet.ox.ac.uk/files/2020-01-17-Social-class-and-earnings_WP.pdf
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    References listed on IDEAS

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    1. Christopher T. Whelan & Bertrand Maitre, 2009. "Welfare Regime and Social Class Variation in Poverty and Economic Vulnerability in Europe: An Analysis of EU-SILC," Papers WP303, Economic and Social Research Institute (ESRI).
    2. Oaxaca, Ronald, 1973. "Male-Female Wage Differentials in Urban Labor Markets," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 14(3), pages 693-709, October.
    3. Akerlof, George A, 1984. "Gift Exchange and Efficiency-Wage Theory: Four Views," American Economic Review, American Economic Association, vol. 74(2), pages 79-83, May.
    4. Tim Goedemé, 2013. "How much Confidence can we have in EU-SILC? Complex Sample Designs and the Standard Error of the Europe 2020 Poverty Indicators," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 110(1), pages 89-110, January.
    5. Richards, Lindsay & Paskov, Marii, 2016. "Social class, employment status and inequality in psychological well-being in the UK: Cross-sectional and fixed effects analyses over two decades," Social Science & Medicine, Elsevier, vol. 167(C), pages 45-53.
    6. Alan S. Blinder, 1973. "Wage Discrimination: Reduced Form and Structural Estimates," Journal of Human Resources, University of Wisconsin Press, vol. 8(4), pages 436-455.
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    Keywords

    social class; earnings; inequality; cross-national variation; Europe.;
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