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Subsistence Theory
David Recardo Year 1817 Deals with Population Lowering the wages rather than Labour Each member of the society be provided enough food, clothing, and shelter to continue to exist.
Procreation
Competitive Theory
The basic assumption of competitive theories of pay is that employers compete among themselves by offering a higher wage to attract employees; while employees compete with one another for jobs by offering their services for a lower wage. Competition then, is essentially a disequilibrium process by which excess demand and excess supply cause changes in wages.
In several industries labour costs are less critical than other costs. Also fluctuations in interest rate and exchange rates as well as relative intensity of capital and technology ,influence the demand for and may cause substitution of both the input and the output of labour as well as the proportionate costs of labour in the total cost of production.
Wages and benefits reflect industry characteristics and personal characteristics as well as societal preferences. Interference by government and trade unions could minimize the influence of the market forces organization demand and supply of labour.
Technology and productivity are major determinants. Low wages may not mean low wage costs. Similarly high wage rates may not mean high unit labour costs. With the growing pressure for linking labour standards with international trade, increasingly it will become difficult for countries, companies and industries to compete on the basis of comparative advantage of cheap labour.