The Effect of Immigration on Intergenerational Income Mobility of Natives

Abstract

This study analyzes the effect of immigration on intergenerational income mobility of natives. I exploit a large quasi-natural policy experiment that led to variation across time and space in exposure to cross-border immigrants: The incremental removal of restrictions for cross-border immigrants in Switzerland in regions close to the border. The study draws from several administrative data covering the universe of labor income, family linkages, and census data. Results show that children from low-income parents experience a stronger decrease in labor income than children from high-income backgrounds. While children from the bottom quintile experience a 3 to 6 percent decrease in labor income, the effect for children from the top quintile is close to zero or slightly positive. Subsequently, intergenerational income mobility, measured as the rank difference between children from the lowest and the highest parent percentile, decreases by 1.5 percentile ranks or 12 percent in relative terms. The income of children from low-income backgrounds decreases more because they are more likely to learn occupations and to choose educational tracks which are more negatively affected by the immigrant influx. Also, there is no adaption in educational or occupational choices that could mitigate the negative labor income effect.