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Introduction of Theories of Wages

Subsistence Theory

David Ricardo introduced this hypothesis (1772-1823)
In line with this view, "The laborers are paid but just to manage to survive and complete the race of life."
In accordance with this notion, a worker's wages are ultimately established at a level of compensation that is only high enough to cover their basic needs. The subsistence level is what we refer to this as.
The fundamental principle of this theory is that whenever employees are paid wages beyond the subsistence level, their population will grow, and earnings will therefore decline to the subsistence level.
In contrast, if employees are paid less than the minimum wage, the number of employed individuals would decline due to starvation-related deaths, malnutrition, sickness, etc., and many individuals will not marry.

Following that, pay would once more increase to the subsistence level. This idea is often referred to as the "Iron Law of Wages" since pay rates are always likely to really be at the subsistence level. Minimum wages are referred to as subsistence wages.

Wages Fund Theory

Adam Smith created this notion (1723-1790).
His thesis was founded on the fundamental tenet that wages are provided to employees from a set pot of money.
He referred to this amount as a wages fund that had been established by saving.
In accordance with Adam Smith, the quantity of labor needed and the wage rate is influenced by the volume of the wages fund.
As a result, high salaries would result from a big wages fund and vice versa.

Marginal Productivity Theory

Phillips Henry Wick-steed from England and John Bates Clark from the United States of America developed this notion.
In accordance with this principle, wages are calculated depending on the contribution to productivity made by the final laborer or marginal worker.
The term "marginal production" is used to describe his or her output.

Residual Claimant Theory

Francis A. Walker is responsible for the formulation of this hypothesis (1840-1897).
Rent, Interest, Profit and Wages seem to be the four primary factors of output or commercial activity, according to Walker.
In his opinion, whatever is left over after accounting for the other three components (Rent, Interest, Profit ); than Wages are paid to the workers.
Therefore, in accordance with this idea, the worker is the remaining contender.
Bargaining Theory of Wages

The most comprehensive version of this idea was proposed by John Davidson.
In accordance with this idea, the negotiating power of employers and employees, as well as labor unions and employees, determines how wages are fixed.
When negotiating power is more significant among the workforce, high pay is more common.
If the company has a larger influence, salaries are more likely to be low.

This video is on Theories of Wages and it has the following sub-topics.

Timestamps
0:11 Introduction of Theories of Wages
0:17 - Subsistence Theory
1:21 - Wages Fund Theory
1:44 - Marginal Productivity Theory
2:06 - Residual Claimant Theory
2:44 - Bargaining Theory of Wages