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 characterize a competitive search equilibrium in which firms in some markets create jobs that workers seek even though those jobs do not make the most productive use of workers' skills. We refer to markets in which workers purposefully search for and accept inferior jobs as exhibiting directed mismatch. This kind of misallocation is driven by the fact that incomplete information about workers' outside options implies that the value of on-the-job search is higher for workers employed in those inferior jobs. Our theory provides new insights into the returns to education as well as the impact of on-the-job search on labor market mismatch. It also suggests that the declining fortunes of college educated American workers in recent decades, like those of high school graduates, are linked to the automation and offshoring of routine-task based jobs.

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In this paper, I show that inefficiently high unemployment of high-school workers can be understood as the labor-market response to an adverse selection problem. The adverse selection problem arises because employment contracts do not systematically discriminate against education, even though over-qualified workers are relatively more likely to quit routine jobs, whose skill requirement are met by all workers. The labor market equilibrium distorts the labor market outcomes of high school graduates by inefficiently increasing their wage at the expense of higher unemployment rate, in order to separate them from overqualified college graduates. In addition, the labor market response to the adverse selection problem creates a demand for post-secondary vocational education, which is valuable because it acts as an entry barrier that prevents college graduates from using routine jobs as stepping-stones towards better jobs.

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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.