Presentation on theme: "Subsistence Theory David Recardo – Year 1817 Deals with Population rather than Labour Each member of the society be provided enough food, clothing, and."— Presentation transcript:
Subsistence Theory David Recardo – Year 1817 Deals with Population rather than Labour Each member of the society be provided enough food, clothing, and shelter to continue to exist. Iron Law of Wages Thomas Num & Malthus influence More than Subsistence Level Procreation Lowering the wages
Wage Fund Theory John Stuart Mill ---- 1930 The wages of an employee are paid from the fund, which presumably has been accumulated by the entrepreneur from operations of the previous years.
Residual Claimant Theory Francis A. Walker – enlarged this theory- “Theory of Political Economy”- 19 th Century Wages are nothing but the residue of total revenues after deducting all other legitimate expenses such as rent, taxes, interest and profits.
The marxian Theory of Surplus Value This theory is inversion of Residual Claimant Theory Labour is the sole source of economic value and therefore labour should exercise the prime claim on revenue. Exploitation Surplus between labour cost and product cost should be paid to the labour.
National Income Theory John Maynard Kenyes ---- 1930 Full emplyment is the function of National Income National Income, in turn, is equal to the total of consumption plus private and public investment. If the national income falls below a level that commands full employment --- Govt. should manipulate the said 3 variables.
Neo Keynsian Distribution Theory Full employment General wage level in the long and short terms. Entrepreneurial decisions can determine the general level of wages in the short run Wages are determined by bargaining between capitalist and the employees
Consumption Theory In 1913- Ford – 5$ per day wages- Automobile- double than the competitors. More wages- more consumption- more demand-more employment
Investment Theory H.M. Gitelman Employees compensation is determined by the rate of return on that employee’s investment. Here investment means education, training and experience.
Institutional Wage Theory Level of Compensation---- empirical & quantitative basis Region cum industry comparison Other comparisons
Supply and demand theory Perfect Competition is the main consideration Wages are determined based on demand and supply of labour
Micro Theories Marginal Productivity Theory Productive Efficiency Theory Bargaining Theory of Wages