Wages are income derived from human labor. Salaries are similar to wages, but denote a more routine and constant payment on a time bound basis, as opposed to a work-bound payment association of wages. The term Wage and Salary encompass remuneration and fringe benefits sponsored by the employer, such as paid vacations, holidays, paid sick leaves, pensions, health insurance, and also bonuses or stock options usually linked to individual or group performance. Though wages and salaries thereby cover all compensation made to employees for either physical or mental work, they still do not represent the income of the self-employed. Total labor costs of an organization include items such as cafeterias, transportation, meeting rooms and other such employee related expenses incurred by the employer for the convenience of employees.
[...] CONCLUSION The wage theories form the basis on which organizations devise their compensation systems. The two key foundations upon which such systems rest are internal equity and market competitiveness. Research has indicated a direct correlation between pay knowledge and pay satisfaction. If employees know how their pay is set, and if the managers explain the process behind the setting of the pay in terms of internal equity and market competitiveness, then employees would tend to remain satisfied with their pay, job, and level and would try to increase their pay by increasing productivity. [...]
[...] On the Principles of Political Economy and Taxation chapter On Wages. Library of Economics and Liberty. Retrieved 27 May 2009, from http://www.econlib.org/library/Ricardo/ricP2.html. Unemployment, Efficiency and Wages. Retrieved 27 May 2009, from http://www.econport.org/content/handbook/Unemployment/Efficiency/Henry.html Books and Articles Abraham, Katharine G & Katz, Lawrence F "Cyclical Unemployment: Sectoral Shifts or Aggregate Disturbances." Journal of Political Economy, University of Chicago Press, p507-22. Akerlof and Yellen (1990). The Fair Wage-Effort Hypothesis and Unemployment. Quarterly Journal of Economics, 105(2), p255-283. Akerlof, George (1982). Labor Contracts as Partial Gift Exchange. [...]
[...] The efficiency wage theory rests on five principles that explain why it may be more beneficial for firms to pay employees above the equilibrium wage rate so they can operate more efficiently and make more of a profit If organizations pay a reduced wage to its employees, those workers with higher skills and greater productivity will look for jobs elsewhere. This would leave the firm with workers who have a lower skill range thus making them less productive overall Workers who have a higher salary can afford to eat more healthily and thus become more productive Higher wages provides employees with an incentive not to look elsewhere for work, and even if they had the incentive, they probably would not find the same pay for the same work elsewhere. [...]
[...] The Wage Fund theory held that wages depended on the relative amounts of capital or the surplus funds available with the owners, and the size of the labor force. If the owner had in his possession a high amount of capital vis-à-vis the number of laborers eligible for wages, wages would be high and vice versa. Wages increase only with an increase in capital or a decrease in the number of workers. Although the size of the wage fund could change over time, it remained fixed at any given point of time. [...]
[...] The study on how and on what basis entrepreneurs effected such payment became different wage theories. Such theories of wage determination and speculations on what share the labor force contributes to the gross domestic product have varied from time to time, changing as the economic environment changed. Over the years, many economists and philosophers have presented a rich array of original theoretical thinking on the subject of pay that forms the basis of the various wage theories. The major theories developed out of such thought and analysis are the Subsistence Theory, Surplus Value Theory, Wage Fund Theory, Residual Claimant Theory, Bargaining Power Theory, Marginal Productivity Theory, Efficiency Wages Theory, Agency Theory, Expectancy Theory, Behavioral Theory, and Equity Theory. [...]
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