Immigrant integration is a central issue in policy debates, with wage assimilation serving as a key indicator of immigrants' economic success. Using matched employer–employee data from Canada, we study how access to higher-paying firms affects the economic assimilation of immigrants. Immigrants are disproportionately concentrated in lower-paying firms, accounting for much of the observed inequality. Nearly half of this sorting occurs across industries, and both firm- and industry-level wage gaps stagnate after eight years, suggesting that further assimilation reflects human capital accumulation rather than improved firm access. Importantly, these disparities persist after controlling for estimates of worker skill, indicating barriers to high-paying firms rather than differences in human capital. The analysis further shows that Canada’s post-2015 immigration policy reforms significantly improved immigrant outcomes: the initial wage gap narrowed by 25–35%, with roughly half of the improvement attributable to better allocation into higher-paying firms. Taken together, the findings highlight the critical role of firm sorting and its interaction with immigration policy in shaping the economic integration of immigrants. 

I study why immigrant workers sort into lower productivity firms relative to comparable natives and what this difference in allocation implies for aggregate productivity. Using matched employer–employee data from Canada, I first document a rich set of facts on immigrant mobility patterns. I then develop and estimate a search model that uses these patterns to identify the sources of immigrant-native sorting differentials and quantify their impact on the host economy. Half of the gap in sorting is driven by a combination of segmented referral networks, higher job instability, and firm discrimination in hiring, implying immigrant labor is misallocated relative to equally-skilled natives. Eliminating these barriers raises immigrant output by 8.4% and total output by 1.1% through a combination of immigrant reallocation and higher endogenous skill investments. The counterfactuals highlight that these gains are achieved without harming native workers and that integration programs should target unemployed low-skill immigrants.

Firms react to changes in factor prices with intensive and extensive-margin employment adjustments at the occupational-level. We study the distributional and aggregate consequences of this make-or-buy dynamic by developing a novel network model of heterogeneous firm-to-firm trade where the boundary of each firm depends on factor prices and firm-occupation comparative advantage in input-production. We show that the model can be aggregated and taken to industry-level data, and use the calibrated model to examine recent trends in employment, wages and trade in the US. Using public ACS data, we provide empirical evidence that a significant fraction of the growth in wage inequality in the US is due to changes in firm/industry specialization and occupational sorting. To understand and measure the underlying causes of these trends, we calibrate the model to occupation and industry data from the ACS and input-output tables. Our model allows us to decompose the rise in wage variation into a) changes in inter-industry trade frictions, b) changes in production technology and c) changes in labor supply. We show that changes in trade frictions have substantial implications for wage inequality and the increases in occupational sorting and concentration.

I develop a theoretically founded empirical strategy to estimate how firms adjust their wage setting policies in response to immigration inflows. As in traditional models, my framework predicts that hiring new immigrants will tend to directly reduce the productivity of existing workers at a firm, putting downward pressure on wages (direct channel). However, this direct effect is offset at the firm level by two competing forces: (i) existing workers may respond by re-allocating away to less exposed firms (worker mobility channel) and (ii) firms respond by adjusting demand for other inputs (input complementarity channel). The impact of immigrants on the labor market therefore depends critically on which firms attract new immigrant labor and the technology those firms operate. I further allow for the fact that immigration may affect firm wages via both changes to marginal product of labor and/or changes to their labor supply curve and decompose these distinct margins of adjustment. I apply my framework to Canadian matched employer-employee data to quantify the mechanisms through which firms adjust to immigrant inflows. 

Immigrants tend to have substantially worse labour market outcomes than Canadian-born workers. This paper provides an overview of immigrants in the Canadian labour market, describing the key barriers that can arise when changing cultures and labour markets and that can hinder immigrants from realizing their economic potential. It then summarizes the efforts Canada has made to alleviate these barriers and highlights some persistent challenges going forward, such as the current state of foreign credential recognition (FCR) and cautioning against the rise of the two-step immigration scheme. Finally, it offers some insights for future policy, such as a more rigorous evaluation of Canada’s Settlement Program, decreasing the disconnect between federal admission decisions and the perceptions of new immigrants by firms and regulatory bodies, and optimizing the points system.