When you have the two paths aligned, and selected, hit Ctrl/Command + J to Join them together. In the Layers Panel, you will see your (previously closed paths) become a single 'Composite Path' Layer.
Ctrl/Command + Shift + J if you need to split them apart again to two separate Path/Object Layers.
PS: You can't join points of separte paths that are already closed. They have to be open Paths.
You can open the Window > Other > Paths Panel. Select the Points and use the 'Knife on Points' in the Edit area of the Paths Panel.
Then use the 'Join Points' command in the same 'Edit Points' area of the Path Panel.
A little trickier but may offer a solution:
Shift + click the points (to multiSelect them), then in the Paths Panel, Edit Points section, use the 'Scale' option (it's on the first row of icons).