Question

Economic and behavioral theories related to compensation

Answer 1

Wages are determined by both the supply and demand of particular type of labour. The factors which influence wages are supply, price, skill, experience, ability, reputation. The wages theories have important policy implications and applicable for some of the definite occupations or line of work, none of these is adequate as a general theory having universal applicability. The economic theories of wages fail to provide a complete explanation of the problem of wage determination. Studies conducted by behavioral scientists to some extent fill the gaps in the earlier theories, which have highlighted the importance of psychological and sociological factors on wages. The key issues developed by economic and behavioral theorists are briefly reviewed in this chapter.

Answer 2

Explanation:

The economic theories of wages fail to provide a complete explanation of the problem of wage determination. Studies conducted by behavioral scientists to some extent fill the gaps in the earlier theories, which have highlighted the importance of psychological and sociological factors on wages.