The United States experienced historic levels of immigration during the latter part of the 20th century. A generation later, immigration remains one of the most contentious social, political, and economic issues in the United States. Scholars still disagree about the impact of immigration on the economy, inequality, and the many choices families must make. Some of the most foundational questions, such as the long-term effects of immigration on the modern economy, remain unanswered due to a lack of data. Given the declining birth rates and shrinking populations in the wealthiest parts of the world, determining the long-term effects of immigration on the receiving population will only become more important.

Our research examines how growing up in a city with a significant increase in immigration affects the earnings of native-born children and, consequently, intergenerational mobility. We focused on intergenerational mobility—the degree to which economic outcomes are correlated across generations—because there is widespread agreement that equality of opportunity is a key societal goal. We concentrated on the earnings of children born between 1977 and 1985 to parents who were also born in the United States. These children, now prime working-age adults, are particularly relevant for this study as they were born at the onset of a notably sharp rise in immigration and labor market inequality. Our analysis links over 23 million children born during these years to their own and their parents’ IRS tax records and responses to Census surveys conducted between 2000 and 2019. Additionally, data from the Social Security Administration include individuals’ county of birth. These data sources enabled us to relate immigration patterns in the 1980s in a person’s birthplace to their adult outcomes decades later.

Conventional economic theory suggests that the effects of immigration on children’s later-life outcomes vary based on their parents’ exposure to immigrants in the labor market, their family’s resources, and other factors that differ significantly between wealthy and poor families. Immigration may influence residential segregation, school quality, and incentives to obtain education, thereby altering the relationship between parents’ incomes and those of their adult children. Our research examines the differences in these elements by estimating the effects of immigration for each decile of the parental income distribution.

Our research finds that immigration tends to raise the incomes of people born into poorer families while reducing the incomes of those born into wealthier families, suggesting increased intergenerational mobility. For example, people who grew up in households in the bottom decile of the income distribution had adult incomes, on average, at the 36.9th percentile of the income distribution. However, those who grew up in a city that experienced a 10 percentage point increase in the immigrant inflow rate during the 1980s (roughly the difference between Pittsburgh and San Francisco) had adult income ranks that were 1.5 percentage points higher. In contrast, people who grew up in the top income decile tended to have adult incomes at the 61.5th percentile. For these individuals, a 10 percentage point increase in immigration was associated with a 2.4 percentage point decrease in income rank. The overall effect on average income across the population was essentially zero. We investigated the effects separately for black men, black women, white men, and white women and found only modest differences. Our findings suggest that immigration tends to reduce the correlation between incomes across generations, thereby increasing intergenerational mobility.

Furthermore, our research finds that the effects of immigration on natives’ educational attainment mirrored its effects on income, suggesting that childhood experiences play a crucial role in determining later earnings. A 10 percentage point increase in the immigrant inflow rate raised the probability of completing high school among children from families in the third decile by 2.2 percentage points, but it had no effect on high school completion among children from wealthier families. Conversely, the same increase in immigration reduced the probability of a child from a family in the eighth decile completing college by 3.5 percentage points. A possible explanation for this trend is that an influx of lower-skilled immigration intensifies competition between native-born workers and immigrant workers for lower-skilled jobs, increasing the benefits of accumulating skills and inducing people who would have taken lower-skilled jobs to pursue further education instead. In fact, the estimated effects of immigration on the educational attainment of natives largely account for the effects on adult incomes.

Our findings have significant implications for how we should consider the consequences of immigration on the economic outcomes of natives. Existing research emphasizes the effects of immigration on labor market competition. However, our research suggests that important effects occur during natives’ youth and play out over multiple generations, ultimately increasing equality of opportunity.

NOTE
This research brief is based on Mark Borgschulte et al., “Immigration and Inequality in the Next Generation,” National Bureau of Economic Research Working Paper no. 33961, June 2025.