Firms, sorting, and the immigrant–native earnings gap

Abstract

Firms’ hiring policies tend to magnify earnings differences between natives and immigrants. At initial arrival many immigrants—especially those from disadvantaged home countries—face difficulties in obtaining jobs at higherpaying firms. As they remain in the country longer some immigrants are able to climb the career ladder to highpay firms, with most of the gains for highly educated immigrants from disadvantaged home countries. Policies that favor labor market mobility by removing search frictions, promoting language skills, or acquiring additional education in the home country could help assimilation. ELEVATOR PITCH