- Wages Fund Theory: This theory was developed by Adam Smith(1723-1790). his theory was based on the basic assumption that workers are paid wages out of a pre-determined fund of wealth. This fund, he called, wages fund created as a result of savings. According to Adam Smith, the demand for labour and rate of wages depend on the size of the wages fund. Accordingly, if the wages find is large, wages would be high and vice versa
- The Surplus Value Theory of Wages: This theory was developed by Karl Marx(1849-1883). This theory is based on the basic assumption that like other article, labor is also an article which could be purchase on payment of its price such as wages. This payment, according to Karl Marx, is at subsistence level which is less than in proportion to time labour takes to produce items. the surplus, according to him, goes to owner. Karl Marx is well known for his advocation in the favour of labour.
