Giovanni Peri (University of California, Davis) (Webinar)

“Immigration and Worker-Firm Matching”

Abstract. The matching between firms and workers is an important determinant of wages in labor markets. Positive correlation between firms and workers’ productivity, called positive assortative matching, increases average wage and the wage dispersion. Using French employer-employee data over the period 1995-2005 we find that increases in immigrant employment, driven by differential historical networks in local labor markets, was associated with stronger positive assortative matching between workers and firms, higher average wages, higher average profits, and higher wage dispersion. We show several pieces of evidence suggesting that an important channel for this effect is increased screening intensity by firms when there is a larger share of immigrants in the labor force, resulting in high quality firms hiring more high quality workers.