Is It Parental Immigration or Economic Status That Shapes Children's Future Success?

This study examines whether the socioeconomic disadvantages of first-generation locals in Denmark stem from their parents’ immigrant status or broader socio-economic background. Using Danish register data (1980–2017) covering 393,767 children, the researchers analyze earnings, education, unemployment, welfare reliance, and criminal convictions. Unconditionally, first-generation locals fare worse than children of natives, but after controlling for parental income, employment, and education, the gaps disappear or even reverse. For example, earnings gaps shift from -51,000 DKK to a slight advantage. The exception is criminal sentencing, where disparities persist. The findings suggest parental background, not immigrant status, drives socioeconomic outcomes​.

Full Citation and Link to Article

Jensen, Mathias Fjællegaard and Alan Manning. "Background Matters, but Not Whether Parents Are Immigrants: Outcomes of Children Born in Denmark", AMERICAN ECONOMIC JOURNAL: APPLIED ECONOMICS (FORTHCOMING). https://www.aeaweb.org/articles?id=10.1257/app.20230389&from=f

Extended Summary

Central Research Question

This study investigates whether the socioeconomic disadvantages of first-generation locals in Denmark are primarily due to their parents’ immigrant status or their broader socioeconomic background. While prior research has documented worse earnings, education, and employment outcomes for children of immigrants compared to those with native-born parents, this study seeks to determine whether these gaps persist when accounting for parental characteristics such as income, education, and employment history. Specifically, the research examines whether being born to immigrant parents independently affects long-term economic and social outcomes or if parental socioeconomic status is the primary determinant.

Previous Literature

Prior studies have documented lower economic and educational achievements among the children of immigrants in many European countries, often sparking political and social concerns about integration. OECD and EU reports have shown that native-born children with foreign-born parents tend to lag behind their peers in school performance and employment rates. For example, an OECD/EU (2018) report found that, on average, 15-year-olds with immigrant parents scored 25 points lower in reading than those with native-born parents—a gap equivalent to more than half a school year of learning. Similarly, employment rates among young adults with immigrant backgrounds tend to be lower across many European nations.

Researchers have debated the underlying causes of these disparities. Some argue that language barriers, cultural transmission, and potential discrimination against visible minorities explain these differences. Others contend that these outcomes are largely attributable to the lower socioeconomic status of immigrant parents rather than immigrant status itself. Studies in the United States, such as those by Abramitzky et al. (2021), have suggested that first-generation locals there often achieve higher levels of upward mobility compared to children of natives, which may differ from the European context due to differences in immigrant selection policies and labor market structures. However, much of the prior literature has been fragmented, with studies either focusing on single outcomes (e.g., education or earnings) or failing to control for a comprehensive set of parental characteristics. This study aims to provide a unified framework that examines multiple child outcomes while incorporating detailed parental controls.

Data

The study uses high-quality Danish register data from 1980 to 2017, linking parents to their children to track intergenerational outcomes. The dataset includes 393,767 individuals born in Denmark between 1980 and 1987, ensuring that their full parental background can be observed throughout childhood. The authors categorize the children into four main groups based on their parents’ birthplaces:

1. Children with two parents born in Denmark (reference group, 362,460 individuals)

2. Children with two immigrant parents (10,399 individuals, 2.62% of sample)

3. Children with one immigrant parent and one Danish-born parent (20,908 individuals, 5.27%)

4. Children with at least one parent from Greenland or the Faroe Islands (2,650 individuals, 0.67%)

The study examines several key outcomes measured at age 30, including:

• Earnings and labor market participation

• Unemployment duration

• Welfare reliance (e.g., unemployment benefits, housing support, student aid, pensions)

• Years of education completed

• Criminal justice involvement (convictions, prison sentences, dropped charges)

Parental characteristics such as income, employment history, occupation, and education are also included to assess how much of the gaps in child outcomes can be explained by socioeconomic background.

Methods

The study employs regression analysis to compare outcomes between first-generation locals and children of native-born parents. The authors estimate models of the form:

Yi = β0 + β1(First-Generation Local) + β2(Parental Income Percentiles) + β3(Parental Employment & Occupation) + β4(Parental Education) + β5(Controls for Gender & Region) + εi

This framework allows them to:

1. First, examine unconditional gaps in outcomes between children of immigrants and children of natives.

2. Then, introduce controls for individual characteristics (e.g., gender, region) to see how much demographic factors explain.

3. Finally, control for a wide range of parental characteristics to determine whether first-generation locals still experience disadvantages when compared to children of native-born parents with similar backgrounds.

A key methodological improvement over prior studies is the use of nonlinear models to better capture the intergenerational income relationship, particularly at the lower end of the parental income distribution, where immigrant families are overrepresented. The authors also conduct Oaxaca-Blinder decompositions to separate the portion of observed outcome differences that stem from differences in parental characteristics versus differences in the way these characteristics influence outcomes.

Findings/Size Effects

The study finds significant unconditional disadvantages for first-generation locals compared to children of natives across multiple dimensions. However, once parental socioeconomic background is accounted for, most of these gaps disappear or reverse:

• Earnings:

  • Without controls, individuals with two immigrant parents earn 51,000 DKK (≈$9,000 USD) less per yearthan children of natives.

  • After controlling for parental income, education, and employment, this gap becomes a slight earnings advantage for those with two immigrant parents.

  • Those with one immigrant parent still earn slightly less than children of natives, even after controls.

• Education:

  • First-generation locals complete fewer years of education than their native-born counterparts in raw comparisons.

  • However, after controlling for parental background, they actually achieve more education than children of natives.

• Unemployment and Welfare Reliance:

  • First-generation locals are 12 percentage points more likely to be unemployed than children of natives.

  • After adjusting for parental characteristics, those with two immigrant parents are actually 2 percentage points less likely to be unemployed than children of natives.

  • Similarly, first-generation locals rely more on public welfare benefits before controlling for parental background, but this difference disappears when adjusting for household characteristics.

• Criminal Justice Outcomes:

  • First-generation locals—especially men—are more likely to be convicted of crimes and sentenced to prison.

  • Even after controlling for parental background, the prison sentence gap remains significant, suggesting other factors, such as discrimination or police targeting, may contribute.

  • Supporting this, first-generation locals are also more likely to have charges dropped, which the authors interpret as possible evidence of over-policing.

• Heterogeneity:

  • The strongest conditional advantages (i.e., outperforming children of natives with similar backgrounds) are observed for women with two immigrant parents.

  • Men with two immigrant parents still perform well in terms of employment and earnings but remain more involved in the criminal justice system.

    
    

Conclusion

This study challenges the assumption that being born to immigrant parents inherently leads to worse socioeconomic outcomes. While first-generation locals appear to be at a disadvantage when compared unconditionally to children of native-born parents, these differences are almost entirely explained by parental socioeconomic status. Once controlling for factors like parental income and education, children of immigrants in Denmark generally perform as well or even slightly better than children of natives.

The one exception is the higher criminal sentencing rates for first-generation locals, which persist even after adjusting for socioeconomic background. The authors suggest that factors such as police targeting or systemic biases in the justice system may contribute to this outcome.

Overall, the study highlights the importance of distinguishing between immigrant status and socioeconomic background when assessing intergenerational outcomes. Its findings suggest that improving economic opportunities for immigrant parents could be a more effective policy approach than focusing solely on cultural assimilation or integration programs.