economic theories of wage regulation

Economic theories of wage regulation address how wages are determined and influenced by various factors. Supply and demand play a key role; when demand for workers increases, wages typically rise, and vice versa. Minimum wage laws aim to set a floor for earnings, ensuring basic living standards. Other theories consider the power dynamics between employers and employees, such as collective bargaining, where unions negotiate better pay. Additionally, external factors like inflation or economic conditions affect real wages and purchasing power, impacting how much workers earn and how their earnings align with the cost of living.