Journal Issue: Opportunity in America Volume 16 Number 2 Fall 2006
An Economic Perspective on Social Mobility
From a broad perspective, social mobility in immigrant households includes the cultural adaptation that immigrants and their children make to their new environment, their adoption of social norms and attitudes that may differ widely from those in their home countries, and their accumulation of “human capital investments,” such as education, language skills, and geographic relocation, which improve their economic status in their new country. In this paper I focus exclusively on this economic aspect of social mobility—the rate at which the economic status of the immigrant household improves from one generation to the next—and thus provide only a limited picture of the intergenerational changes that immigrant households inevitably experience in the United States.
There is, however, an important link between the economic notion of social mobility and the cultural issues traditionally emphasized in the immigration debates in the United States and many other countries. To make economic gains, an immigrant will often have to acquire skills that are valued by American employers, such as learning English and adopting the norms of the American workplace, and will often have to move to economically vibrant areas far from the ethnic enclave. Each of these steps helps weaken the link between the immigrant's foreign past and his or her American future.
Many immigrants, therefore, face an important trade-off: they may have to discard some of their native attributes, habits, and cultural characteristics and pick up new ones that enhance their chances of success in the American economy. Put differently, economic and noneconomic forms of social mobility may often complement each other: there will be more mobility of one type when there is more mobility of the other.
Research on immigrant economic performance has provided two insights that are widely accepted in the immigration debate. First, upon arrival in the United States, the typical immigrant worker suffers a sizable earnings disadvantage (relative to native-born workers), a disadvantage unlikely to disappear during his or her working life. Second, the many national origin groups that make up the first-generation population vary widely in socioeconomic status and earnings.4
Even within the boundaries provided by the narrow economic definition of social mobility, any study of intergenerational economic progress in immigrant households needs to examine two related, but distinct, phenomena. First, to what extent does the initial economic disadvantage of the immigrants narrow across generations? Put differently, do the children (or grandchildren) of immigrants “catch up” to the average economic status of native-born workers? It seems reasonable to suspect that the children of immigrants enjoy a “head start” in their earnings capacity that is not experienced by any other previous generation. After all, they are typically the first of the immigrant household to graduate from American schools, the first to benefit from having English as a native tongue, and the first to know about the internal workings of the U.S. labor market before getting their first job.
Second, it is well known that the relation between the earnings of parents and children, regardless of whether the parents are foreign- or native-born, is driven by a phenomenon known as regression toward the mean. Even though the children of highly successful parents are themselves likely to be successful, they are not likely to be as successful as their parents. Their economic performance will probably revert downward toward the population average. Similarly, even though the children of low-skill parents are themselves likely to be low-skilled, they are unlikely to be as unskilled as their parents; again there is a reversion upward toward the population average. Regression toward the mean acts like a double-sided magnet: it pulls the economic status of the children in outlying groups toward the mean of the population, regardless of where the parents start out.
The explanation for this phenomenon is that parental skills and family background are not alone in influencing the transmission of skills from one generation to the next. Because many other unknown and random factors, such as luck and imperfect genetic transmission of ability, motivation, and drive, are also at work, children of parents at either tail of the wage distribution will probably lie closer to the middle of that distribution as adults.
The concept of regression toward the mean is crucial in understanding social mobility in the immigrant population. Some ethnic groups who enter the United States do very well in the labor market, while other groups perform poorly. Part of these ethnic differences will likely be passed on to their offspring. The melting pot metaphor argues that these differences disappear relatively quickly, leaving ethnic groups indistinguishable. In terms of the economic status of different ethnic groups, the melting pot suggests that regression toward the mean is an important phenomenon. Economic differences among ethnic groups in the first generation are fleeting, and an immigrant's ethnic background will have little effect on his descendants' economic well-being.5