Empirical evidence for the US shows that migrants increase the productivity of regions. To explain the impact of migrants on the average firm productivity we construct a general equilibrium model with monopolistic competition a la Melitz (2003). We consider heterogeneous firms with different...

Increasing wage inequality is associated with changes in the degree of labor market sorting, i.e. the allocation of workers to firms. To measure sorting, we propose a new method which disentangles the respective contributions of worker and firm heterogeneity to wage inequality. Inspired by...