Luke Rawling (Queen's University)

Luke Rawling
Queen's University

Abstract

I study how barriers to labor market integration shape immigrant outcomes and the aggregate economy. Using Canadian matched employer–employee data, I find that new immigrants earn substantially less than comparable natives, sort into lower productivity firms, have higher job turnover, search longer when unemployed, and cluster in firms with co-ethnic incumbents—patterns that dissipate with time in the host labor market. Guided by these facts, I develop and estimate a search model with referral networks, sorting, and assimilation. Half of the gap in firm sorting is driven by labor market barriers and lower quality networks rather than differences in human capital, suggesting immigrants are substantially misallocated. Eliminating these barriers would raise immigrant output by 10% and total output by 1.5% without harming native workers. Feasible integration programs deliver smaller but meaningful output gains. The counterfactuals highlight that integration programs should target unemployed low-skill immigrants.

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