Abstract
This study compares the usefulness of different statistical models (human capital and stochastic models), previously used to estimate earnings mobility, in predicting future individual earnings and earnings distributions. Special attention is given to the effect of considering individual heterogeneity. A 20-year panel, collected from the Swedish Level of Living Survey, of 651 employed men is used. The models are estimated on 17 periods and predictions are made for three. It is found that a dynamic human capital model gives the best predictions of individual earnings and that earnings mobility is overestimated by all models.