Basic economic theory suggests that wages depend on a workers marginal revenue Product MRP. (this is basically the value that they add to the firm who employs them
MRP is determined by two factors
MPP - Marginal physical product - the productivity of a worker
MR - Marginal Revenue of last good sold - Effectively the price and demand for the good that the worker produces.
Another factor that determines pay, is the demand for the good. For example, the best football players get paid much more than the best hockey players because there is much more demand for watching football games, there is more money in the sport so clubs are willing and able to pay much higher salaries to get the service of the best players.
As well as demand, pay will be determined by supply. Workers who have specialist skills will generally be awarded with higher pay. You could say if someone spends 5 years to be trained as an accountant, they deserve higher pay to reimburse them for the investment of time in becoming skilled.
What determines wages in The Theory of Negotiated Wages
In this theory, it is basically stated that wages are negotiated by the acceptance of them for the job done. If the two things dont agree then there will be no wage or an adjusted wage.
David Ricardo's theory called the Iron Law of Wages came to be called the Theory of Efficiency of Wages. The Iron Law of Wages says that the worker is going to be paid the minimum wage needed to survive.
market theory of wage determination.
Laissez-faire theorists argue that the market forces of SUPPLY AND DEMAND will serve to set prices and wages in the marketplace.
(in Marxist theory) the excess of value produced by the labor of workers over the wages they are paid.
DISMAL
The Theory of Wages was created in 1932.
David Ricardo's theory called the Iron Law of Wages came to be called the Theory of Efficiency of Wages. The Iron Law of Wages says that the worker is going to be paid the minimum wage needed to survive.
It set wages and negotiated with labor unions.
J.R Hicks has written: 'The theory of wages' -- subject(s): Wages, Labor economics, Unemployed, Labor unions
The Iron Law Of Wages
higher wages
market theory of wage determination.
debit wages expensescredit wages payable
market theory of wage determination.
30% off of minimum wages = 30% discount applied to the minimum wages = minimum wages - (30% * minimum wages)
population
Laissez-faire theorists argue that the market forces of SUPPLY AND DEMAND will serve to set prices and wages in the marketplace.