The following points highlight the top six theories of wages. The theories are: 1. The Subsistence Theory of Wages 2. Standard of Living Theory 3. Wage Fund Theory 4. Residual Claimant Theory 5. Marginal Productivity Theory 6. Discounted Marginal Productivity Theory. Theory # 1. The Subsistence Theory of Wages: The theory was formulated by physiocrats. According to them wages would [...]
According to the modern theory of wages, wages are the price of services rendered by a labor to the employer. As products the prices are determined with the help of demand and supply curve. Similarly, the wages (prices of services rendered by labor) is also obtained with the help of demand and supply of labor. Therefore, for the determination of [...]
Generally, the prices of factors are determined by the interaction of demand and supply, which should also be applicable in determining the wages for labor. However, the theory of demand and supply is not fully applicable while determining wages for labor. This is because labor as a factor of production is distinct from other factors of production. The following are [...]