No. 2020-03 - Social class and earnings: a cross-national study

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.