WAGES AND ITS DETERMINANTS

What is Wages?

Wages are payments/reward for labour services.

There are two types of wages namely;

1. NORMINAL WAGE: This is known as wages in terms of money.
2. REAL WAGE: Wages in terms of the quality of goods and services.

Determinants of Wages

Wages can be determined through

1. The market forces of demand and supply of labour.
2. The marginal productivity of labour.
3. The trade union collective bargaining of labour.
4. The effect of new Inventions.
5. Government legislations.

REASONS FOR DIFFERENCES IN WAGES

1. The differences in wages perhaps between the skilled and unskilled labour is because the skilled workers usually undergo long period of special training unlike the unskilled.
2. The cost of acquiring these special skills are sometimes too exorbitant.
3. The skilled workers are always short in supply compared to the unskilled.
4. There is high demand for skilled workers to that of unskilled.
5. There are jobs that require specialists in the area.