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.
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.
The Iron Law of Wages is an economic theory that suggests wages will tend to settle at the minimum level necessary for workers to survive. This theory implies that increases in wages would eventually be offset by rising population growth, leading to a cycle of low wages and high unemployment. The theory has been widely debated and criticized for its assumptions and implications.
The theory of the Iron Law of Wages suggests that wages fluctuate around a subsistence level due to the relationship between labor supply and demand. This theory implies that as population grows, wages tend to decrease to a subsistence level, leading to a cycle of low wages, increased population, and low wages again.
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.
population
David Ricardo's theory of wages is part of the field of economics, specifically known as classical economics. His theory of iron law of wages posits that in the long run, wages tend to settle at the subsistence level necessary for the workers to survive.
According to the theory of the iron law of wages, wages tend to fluctuate in cycles based on supply and demand. When there is a surplus of labor, wages tend to decrease, as employers have more options and can pay workers less. Conversely, when there is a shortage of labor, wages tend to increase as employers need to compete for workers.
Some of the key theories of wages include the classical theory, which states that wages are determined by the supply and demand for labor in the market; the neoclassical theory, which emphasizes the role of productivity and marginal revenue product in determining wages; and the bargaining theory, which suggests that wages are determined through negotiations between employers and workers. Additionally, the dual labor market theory posits that there are two distinct segments of the labor market with different wage-setting mechanisms.
It set wages and negotiated with labor unions.
DISMAL
J.R Hicks has written: 'The theory of wages' -- subject(s): Wages, Labor economics, Unemployed, Labor unions
The Iron Law Of Wages