Occupation-Based Socioeconomic Index with Percentile Ranks

Working paper number: 
2020-59
Paper Abstract: 
In this paper, we propose a method for constructing an occupation-based socioeconomic index that can easily incorporate occupational structure changes. The resulting index is the education percentile rank of an occupation for a given cohort, based on contemporaneous information pertaining to education composition and the number of workers at the occupation level. An occupation may experience an increase or decrease in its ranking when either education or size of relevant occupations change. The method is flexible in dealing with changes in occupation and education measurements over time. Applying the method to U.S. history from the mid-nineteenth century to the present day, we derive the index using the IPUMS U.S. Census microdata from 1850 to 2000 and the American Community Surveys (ACS) from 2001 to 2018. Compared to previous occupational measures, this new measure takes into account occupational status evolvement caused by long-term secular changes in occupational distributions and education composition. The resulting percentile rank measure can be easily merged with social surveys and administrative data that include occupational measures based on the U.S. Census occupation codes and crosswalks.