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What is real wage? Real wage, or adjusted wages, is the amount of pay a person can expect to receive after factoring in the current inflation rate . For example, if a person's nominal wage is $12.00, their real wage is above or below that amount depending on the current inflation rate.

Efficiency wage theory includes several models, including the shirking model, the labor turnover model, the selection model and sociological models. Efficiency wages offer a number of benefits, including lower turnover, higher morale, better job candidates, employee loyalty and trust and increased productivity.

The DMP model can be used to explain the position of the Beveridge curve and the location of the economy on the curve. If unemployment and vacancies move in opposite directions, then changes can be regarded as reflecting variations in the demand for labor which occur over a business cycle.

Real wage unemployment is a situation in which wages are set above the equilibrium level, resulting in an excess supply of labor or unemployment.

Subsistence Theory of Wages. This theory is also known as the Iron Law of Wages or the Brazen law of Wages. ... Surplus- Value Theory of Wages. Karl Marx propounded this theory. ... Bargaining Theory of Wages. This theory explains that wages depend upon the bargaining power of the workers. ... Residual Claimant Theory of Wages.

Neoclassical theory suggests that the real wage is driven by the real marginal revenue product of labour, which we proxy by output per worker given the evidence for a constant-returns technology at the aggregate level.

The term real wages refers to wages that have been adjusted for inflation, or, equivalently, wages in terms of the amount of goods and services that can be bought. This term is used in contrast to nominal wages or unadjusted wages.