Yu (Sonja) Chen

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+1 (226) 972-1125
University of Waterloo
Department of Economics
Hagey Hall building, Room 237
200 University Avenue West
Waterloo, ON, Canada N2L 3G1

About Me

I am a PhD candidate in Economics at the University of Waterloo. My research fields include macroeconomics and labour economics.

I will join the University of Calgary Department of Economics as an Assistant Professor starting in July 2016.

Curriculum Vitae

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Job Market Paper

In this paper, I show that displacement of high-school workers out of routine jobs can be understood as the labour-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 those routine jobs. The labour market equilibrium penalizes high school graduates by inefficiently increasing their unemployment rate, in order to separate them from overqualified college graduates. In addition, the labour 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 to prevent college graduates from using some routine jobs as a stepping-stone towards better jobs.

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Working Papers

We provide a theory of why workers search for jobs where they have a comparative disadvantage. The core idea is that, in the presence of asymmetric information about workers outside options, the value of on the job search is higher for workers employed in such jobs. We use this insight to argue that the declining fortunes of educated American workers are a consequence of the reduction in the value of jobs involving mainly cognitive, but routine, tasks that are increasingly automated or off-shored.

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.