Modeling Distribution of Jobs Using Production Function

Abstract

This paper presents a theory in which the composition of jobs is always sub-optimal, we use a search
framework which is a natural tool to model a situation in which identical workers can end up in
different jobs with very different compensation patterns. First we will show that if different types of
jobs have different creation (capital) costs, then those which cost more to create will have to pay
higher wages due to rent sharing; therefore. There will naturally exist good and bad jobs in this
economy. Second, establish that in an unregulated market, the composition of jobs is in efficiently
biased towards bad jobs.