Occupational Earning Potential: A New Measure of Social Hierarchy Applied to Europe

Social stratification research often assumes a hierarchy of occupations, yet translating occupations into a linear, easily interpretable scale remains challenging. Existing occupational scales, such as the International Socio-Economic Index (ISEI), aggregate multiple indicators like education and income but lack intuitive interpretation and often rely on limited survey data. Our paper introduces a new measurement - Occupational Earning Potential (OEP) - which ranks occupations solely based on their median earnings, expressed as percentiles of the national earnings distribution.

We construct the OEP scale using comprehensive administrative and survey data from five countries: Sweden, Germany, Switzerland, the UK, and the US, covering several decades. By pooling annual data from tax records, labor force surveys, and population censuses, we provide a harmonized, cross-country measure of occupational hierarchies that captures earnings-based distinctions in great detail. This makes OEP a valuable tool for understanding both national and international occupational structures.

Our analysis shows that OEP correlates strongly across time (r=0.90) and countries (r=0.80), supporting its use as a common scale for cross-national comparisons. The OEP also explains a significant portion of variance in earnings across occupations and countries, outperforming ISEI on key measures of earnings inequality. Additionally, we demonstrate that OEP is strongly associated with educational attainment and intergenerational social mobility, making it a powerful indicator of occupational inequality.

This study offers a new, easily interpretable scale based on real-world earnings data that provides fine-grained insights into occupational hierarchies. By utilizing new administrative and survey data, OEP opens up fresh avenues for research into the task-based, skill-based, and inequality dimensions of detailed occupations, directly contributing to the broader understanding of labor market stratification.