<p>Using matched employer-employee data for Belgium, covering 1.1 million workers over almost two decades (1999–2016), we find that first-generation immigrants born in developing countries and their second-generation peers earn significantly less than natives (i.e. evidence of a persistent overall wage gap between immigrants and natives). Controlling for a large set of covariates (including sector or firm fixed effects), our estimates suggest that while first-generation immigrants still experience a significant adjusted wage gap, there is no evidence of such a gap for their second-generation peers. The difference between these overall and adjusted wage gaps highlights the key role of compositional effects in explaining inequalities between immigrants and natives. Wage decompositions indeed show that first-generation immigrants earn less than natives because of their lower level of human capital, their segregation in low-paying occupations and sectors, and an ethnic penalty. Second-generation immigrants, on the other hand, receive lower wages, mainly due to the fact that they are younger and have fewer years of tenure than natives. Sensitivity analyses testing the temporal stability of overall and adjusted wage gaps, as well as the moderating role of workers’ level of education, gender and geographical origin, refine these findings.</p>