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. 

Immigrant workers sort into lower-productivity firms than natives. In this paper, I study the causes and aggregate consequences of this difference in allocation. 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 (i) identify the sources of immigrant-native sorting differentials and (ii) quantify their impact on aggregate output. Segmented referral networks misallocate immigrant labor across firms, explaining 41% of the gap in firm sorting. Job instability and hiring discrimination further lower immigrant output, largely by reducing employment rates. Eliminating these barriers entirely raises immigrant output by 4.6% and total output by 0.7% through a combination of immigrant reallocation and higher endogenous skill investments. The counterfactuals highlight that these gains are achieved with negligible average effects on native workers and that integration programs should target unemployed lower-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.

Designing immigration policy is a challenge of profound importance for destination economies around the world. Understanding how immigration impacts the economy is crucial for this task. In this article, I survey the literature on this topic and begin by explaining why estimating the impact of immigration on the economy is an empirically challenging exercise. I then show that, even among studies with convincing empirical strategies, there is far from a consensus on the impact of immigration on the wages and employment of existing workers. Immigration can sometimes lead to wage increases and better opportunities for native workers; in other contexts, it lowers wages and crowds out native employment. I end by discussing the underlying mechanisms that lead to these aggregated responses and argue that the absence of a universal relationship between immigration inflows and the economic outcomes of existing workers should not be surprising; these outcomes are determined in large part by how individual firms respond to immigration which may differ depending on local economic conditions, the types of immigrants arriving, and how those immigrants complement existing firms and workers. It is the hope that this article will be of practical help to policymakers weighing the effects of immigration on local markets. 

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.