Yu (Sonja) Chen

+1 (403) 220-7357
Department of Economics
University of Calgary
2500 University Dr. N.W.
Calgary, AB, T2N 1N4

About Me

I am an assistant professor in the Department of Economics at the University of Calgary. My research fields include macroeconomics and labour economics.

Curriculum Vitae

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Working Papers

We analyze a model of competitive search on the job in which workers' outside options are private information. Because workers direct their job search and current employers are able to counter outside offers, potential employers who do not observe workers' productivity in their current jobs use wages as a signal of workers' willingness to switch jobs. In turn, this implies that the wage contracts that employers post in the market for unemployed workers not only direct job search but also signal future worker mobility. We show that a conflict between the signaling and allocative roles of wage contracts can give rise to coordination failure, in which case bad jobs are created in some markets. Bad jobs are found at the bottom rungs of job ladders and they may involve inefficient characteristics - productivity, job security and non-pecuniary amenities and inefficient mobility. Our results suggest a role for policy in facilitating the coordination of market participants on equilibria where only good jobs are created.

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I show that the labor-market crowding out of less-educated workers can be understood as the labor-market response to an adverse-selection problem. When high-skilled workers apply for less skillintensive jobs, adverse selection arises when employment contracts cannot systematically discriminate against education level, even though overquali ed workers are more likely to quit. In order to separate workers, the equilibrium distorts the labor-market outcomes of less-educated workers with an inefficiently high unemployment rate. Furthermore, the distortion creates a market value of postsecondary vocational education, because it acts as an entry barrier and protects less-educated workers from the competition of overquali ed college graduates.

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Work in Progress

In this paper, I examine the role of skill-mismatch on the dynamics of a labour market coming out of a recession. In a recession, workers are more likely to accept jobs with low match quality but search for better ones when the economy recovers. I construct a dynamic model where the fraction of mismatched, skilled workers within an economy depends on the length and depth of a recession. When the proportion of “poachable" skilled workers is disproportionately large, firms prefer to hire workers who are currently employed out unemployed workers. As a result, the persistence and duration of unemployment in a recovery depends on the level of mismatch accumulated during the recession. I calibrate the model to the U.S. labour market to identify to what extent the model can explain slow recovery phenomenon in the U.S. labour market.

We are interested in the impact of the Canadian Employment Insurance (EI) system on post-unemployment outcomes. In 2005, four pilot projects of the EI program were established to further increasing access to benefits while promoting labour force attachment. Using the Survey of Income and Labour Dynamics (SLID) data, we analyze the effects of the pilots on reemployment rates and the extent to which the pilots promote industry and occupational mobility between the jobs before and after unemployment. In addition, we are interested in analyzing the impact of the pilots on measures of match quality.