Debates about economic inequality tend to focus on two poles: the runaway fortunes of the top 1% and the stagnant paychecks of everyone else. But what about the broad middle? Does the old idea that your occupation predicts your economic standing still hold, especially when it comes to wealth rather than just income?
A new analysis published in Social Indicators Research takes up that question across five European countries. The authors find that occupational class continues to sort households into strikingly different economic positions, though the categories that work well for explaining income differences do a somewhat shakier job when applied to wealth.
The question behind the study
For much of the 20th century, sociologists used a person’s occupation as shorthand for their place in the economic hierarchy. In recent decades, some scholars have argued this approach is outdated, either declaring the “death” of class or proposing that broad class categories should be broken into many smaller occupational groups. At the same time, economists studying inequality have largely focused on the very top of the distribution, or on the classical split between wage-earning workers and capital-owning employers.
Carlos J. Gil-Hernández of the University of Florence and colleagues at the London School of Economics and the European Commission’s Joint Research Centre set out to bridge these perspectives. Their central question: do broad occupational classes still map onto how wealth, not just income, is distributed among ordinary households?
Wealth matters for reasons that paychecks don’t fully capture. It cushions people against job loss or medical emergencies, generates investment returns, and passes between generations through inheritance. It is also more concentrated than income, with different drivers such as saving behavior, asset prices, and tax policy shaping how it accumulates.
How the researchers went about it
The team drew on the Luxembourg Wealth Study, a cross-national database that harmonizes household surveys on assets, debts, and income. Their sample covered Finland, Germany, Greece, Spain, and Slovakia from 2002 to 2018, a period of slight-to-moderate rising inequality. These countries span different welfare regimes, housing markets, and economic trajectories, from Finland’s redistributive model to Slovakia’s post-communist transition.
They sorted household heads aged 25 to 75 into five occupational categories: an upper class of managers and large employers; an upper-middle class dominated by professionals; a middle class including the self-employed and clerical workers; a skilled working class; and a low-skilled working class. Unemployed heads were kept as a separate group. The scheme draws on employment status, broad occupation codes, and educational attainment.
For each class, the researchers measured median household income and net wealth, the composition of household portfolios (financial assets, business holdings, primary and secondary residences), and the wealth-to-income ratio, which captures how many years of income a household’s accumulated assets represent. They also calculated how much of total inequality, using the Gini index and a related measure called mean log deviation, could be attributed to differences between classes rather than within them. Finally, they applied a stratification index that estimates the probability that a randomly chosen person from a higher class will rank above a randomly chosen person from a lower one.
What the numbers showed
The class hierarchy showed up clearly in both income and wealth, but it was steeper for wealth. The gap between the top and bottom classes in median net wealth dwarfed the corresponding gap in income. In Germany, for instance, the median low-skilled household held net wealth close to zero, reflecting low homeownership in that group. In Greece and Spain, the upper-middle class (mostly professionals) actually edged out the upper class in median income, likely because the upper class in those countries contains many small business owners whose reported earnings are modest.
Over the 2002–2018 period, upper classes increased their share of total wealth in most countries, while working classes and the unemployed lost ground. In Spain, the upper class ended up owning about 14 percentage points more wealth than its population share would predict under equal distribution; the low-skilled class fell roughly 14 points below. Slovakia showed a similar widening. Germany bucked the trend somewhat, with a modest convergence.
Different portfolios, different prospects
The composition of household wealth varied sharply by class. Upper and upper-middle class households held more of their wealth in financial assets like stocks, bonds, and deposits, and business holdings. These assets tend to be more liquid and can yield higher returns, though they also require investment knowledge or professional advice.
Working-class households, by contrast, held wealth almost entirely in the form of a primary residence. Homes provide housing security and a vehicle for passing wealth to children, but they are hard to convert to cash in a pinch and offer little flexibility during downturns. The authors argue that this difference in portfolio structure, not just the total amount of wealth, shapes how different classes weather economic shocks and reproduce their status.
Wealth-to-income ratios reinforced the pattern. Upper-class households in Spain, for example, held wealth equivalent to roughly 9.5 years of income at one point in the 2000s, while working-class households held much less. Across countries, the ratio climbed as you moved up the occupational ladder, and in several cases the gap between the top and bottom widened over time.
Class still explains a lot, but less for wealth than income
When the researchers decomposed total inequality into between-class and within-class components, occupational class accounted for around 50% of the Gini coefficient for income and about 40% for wealth on average. The stratification index told a similar story: a member of a higher class had roughly a 71% chance of earning more than a member of a lower class, and about a 66% chance of holding more wealth.
These figures held steady or grew over the study period, which the authors interpret as evidence against claims that broad occupational categories have lost their analytical power. At the same time, the consistently higher numbers for income than wealth suggest that occupation-based schemes are better tuned to labor-market outcomes than to the accumulation of assets that can come from inheritance, rent, or capital gains.
What it means and where it falls short
The authors read their results as a caution against two opposite tendencies in inequality research: declaring class irrelevant, and focusing only on the super-rich. Their findings suggest that the main wealth accumulators outside the top 1%, such as employers, senior managers, and higher-grade professionals, sit at the top of standard occupational schemes. But the fact that wealth is less well captured by these schemes than income points to economic resources, including inheritances and rent-generating assets, that do not flow directly from one’s job.
A few caveats are worth noting. Capital income and financial wealth tend to be underreported in household surveys, particularly by the wealthiest, so the true gaps may be larger than measured. The analysis uses households rather than individuals as its unit, which can obscure gender inequalities within couples. And the study intentionally set aside the effects of taxes and welfare transfers to enable cross-country comparisons, meaning it describes market-generated inequalities rather than the final distributions people experience after redistribution.
The authors note that welfare regimes likely play a significant role in buffering the consequences of wealth disparities, particularly in countries like Finland where public services reduce dependence on private assets. Teasing apart that interaction, they suggest, remains an open question for future work.
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