The Above Presentation is about Wages-fund theory given by aam smith

1. Wages Fund theory
-Adam Smith
17PBA207-17PBA212

2. HISTORY
➔ WAGE FUND THEORY WAS FIRST
DEVELOPED BY ADAM SMITH IN 1779
➔ FURTHER DEVELOPED BY KARL MARX
AND DAVID RECARDO

3. Theory says….
The demand for the labour could not
increase except in proportion to the
increase of funds desired to the payments
of the wages

4. The Amount of wages is
FIXED. Wages increases
with the decrease in
Labours. So, Wages fund
determines the demand
for Labour.

5. Supply!
Average wages will go down with the increase in supply
and with the increase in population of labours

6. Examples
Consider Roshan as the
only labour in the whole company
called ABC. Since there is no other
labour working with him he will get
High wages of Rs.1000/day
Now consider 4 other joins and his
average wage would go down to
Rs.250.
RS.1000
Now Average wages
would be Rs.250

7. Drawbacks
1. Not clear from where the wages funds will
come
2. No emphasis has been given to the
efficiency of the workers and productive
captivity of firms
3. Does not explain the differences between
wages at different levels and in different
regions

8. In Order to increase Average
Wages fund…..
Wages funds
should be
enlarged
Number of
labours asking for
employment
should be
reduced

9. The Wages of pedantry is pain.
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