Determination of Wages under perfect competition

Determination of Wages under perfect competition Meaning & Definitions: A wages may be defined sum of money paid under contract by an employer to a worker for services rendered . ---By Benham By wages we mean a price paid for the services of labour of any kind . ---By Raymond.T.ByeDetermination of wages In perfect competition following features are found in labour market . Large no. of buyers [employers] and sellers [owners]. All the units of labour are homogeneous . Workers are fully mobile and they can easily switch over from one working place to another Workers are not organized in trade union or workers party and they cannot put pressure on employers .Limitations In real business practice no perfect competition is found . This theory is a reproduction of price determination of goods under perfect competition . It fails to explain long run changes in wages rates . It neglects government policies and bargaining by trade unions .

Determination of wages under Monopoly Introduction: Wages determination in monopoly is a unique situation following circumstances are found under this situation . In this market the firm has monopoly in product market .In labour market however there is perfect competition .Therefore the supply curve of labour is perfectly elastic.The demand curve will be negatively sloping.

Monetary WagesMonetary wages is a wage which a workers receives in terms of money.Monetary wages is a narrow concept.Monetary wages does not gives proper idea of standard of living, lifestyle and purchasing power.Ex: If a factory worker is paid Rs10,000 he can purchase things worth Rs10,000.Real WagesReal wages refers to the total amount of goods and commodities which a worker buy with monetary wages.Real wages is a Broad concept.Real wages give proper idea lifestyle and standard of living.In real wage a worker is given monetary wages + facilities, allowances, reimbursement, comfort, luxuries and benefits. Thus he can have more benefits than monetary wages.