By developing a job search model with college degree as a noisy signal, this paper analyzes the underlying mechanism of a 'degree-inflation,' measured by the proportion of a highly educated workforce performing unskilled tasks (i.e., cross-skill matches). Skilled workers can perform either...

This paper develops a tractable job search model with information friction to analyze the underlying link between the performance-based compensation scheme and labor market fluctuations. Workers privately learn their match quality upon starting the job and keep searching for better paying jobs....