Children of low-income immigrants in the US systematically out-earn the children of native-born Americans from the same economic background.
April 25, 2026
Original Paper
Latent Human Capital and the Immigrant Mobility Advantage: A General Equilibrium Analysis
SSRN · 6620658
The Takeaway
Second-generation immigrants possess a mobility advantage that allows them to climb the economic ladder faster than their peers. This advantage comes from a combination of the parents' drive and the way institutional barriers disappear as families integrate. Many people assume that coming from a poor immigrant family is a permanent economic handicap. The data shows it is actually a powerful predictor of future wealth and success. This phenomenon challenges the idea that the American Dream is dead for newcomers. In fact, it seems to work better for the children of immigrants than for anyone else.
From the abstract
Children of low-income immigrants in the United States systematically out-earn children of comparable natives. I develop a dynastic general-equilibrium model to explain this "immigrant mobility advantage" and quantify the macroeconomic costs of the institutional frictions underlying it. The central mechanism is a wedge between latent human capital and realized earnings: immigrants are positively selected on ability but face institutional frictions that decay at rate λ. Calibrated to U.S. data, t