0 Wage Theories

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Wage theories explain how wages are determined. Historically, the subsistence theory viewed wages as only enough to provide basic sustenance. Modern wage theory sees wages as the price of labor set by the interaction of labor demand and supply in the market. Demand for labor depends on factors like productivity, technology, and demand for products, while supply relates to the number of available workers. Under competitive conditions, equilibrium wages are reached at the point where the labor demand and supply curves intersect.

Business Economy & Finance Technology

Wage theories

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0 Wage Theories

1. Wage theories

2.

3.

4.

5.

6.

7.

8. Shift in demand for labour D1 D2 MRP1 MRP2 MRP D Increase Decrease demand Demand for labour unit Productivity Y X O

9. Wage determination under competitive condition DL D SL S W AW=MW W O Y X X Y O (Labour supply curve ) (Wage line) AC=MC of labour N E Units Of Labour Units Of Labour Wage Rate Industry Market Firm

10. Relation between Wage and Managerial Productivity X Y Y X 0 0

12. Y Y X X 0 0

13.