Immigrants are new comers in a labor market. As a consequence, they lack of social networks and other country specific and not directly productive valuable assets affecting their relative bargaining position against employers. We introduce this simple observation into a matching model of the labor market and show that immigrants increase employment prospects of competing natives. To test the predictions of our model, we exploit yearly variations between 1998 and 2004 in the share of immigrants within occupations of 12 European countries. We identify the causal impact of immigrants on natives' employment rate using an instrumental variable strategy based on historical settlement patterns across host countries and occupations by origin countries. We find that natives' employment rate increases in occupations and sectors receiving more immigrants. Moreover, we highlight the heterogeneity of this impact across groups of immigrants and host countries along dimensions that affect immigrants-natives relative reservation wages.

Over the period 1994–2012, immigrants’ wage growth in France outperformed that of natives. We investigate to what extent changes in task‐specific returns to skills contributed to this wage dynamics differential through two channels: changes in the valuation of skills (price effect) and occupational sorting (quantity effect). We find that the wage growth premium of immigrants is mainly explained by the progressive reallocation of immigrants toward tasks whose returns increase over time. Immigrants seem to have taken advantage of labor demand restructuring driven by globalization and technological changes.