This paper investigates how children of immigrants from Turkey are integrated into Swedish society. The educational achievements and labour market outcomes of this group are compared with the performance of the offspring of native-born parents. The aim of the study is to explore whether we can observe a tendency towards downward mobility among young people of immigrant background in Sweden and thereby provide reflections on the existing formulation of the segmented assimilation theory. Findings show that descendants of immigrants seem not to be in the process of downward assimilation, that is, social exclusion and therefore formation of a distinct underclass in Sweden. The concept of subordinate inclusion is a more appropriate description of the experiences of children of immigrants.