Remuneration either in cash or kind or in both to a labourer engaged in production for the physical or mental work partially or fully is known as wage in Economics.
According to the modern theory of wage, wage is determined by the demand for the supply of labour. Therefore, the theory is known as the demand and supply theory of wage. Demand for labour is affected by the technique of production, prices of other factors and marginal productivity of labour etc.
Supply of labour depends on the factors like size and age structure of population, nature of the work, environment, tradition, work leisure ratio etc. under perfect competition where demand for labour equals the supply of labour i.e. where demand curve and supply curve cut each other becomes the equilibrium point and wages are determined accordingly.
Wage differences in different occupations and industries are due to difference in ability, lack of mobility and opportunity, presence of non competing groups, nature of employment future prospects, scope for extra earnings and the impact of trade unions etc.
Wages may be paid either in cash or in kind. If wages are paid in terms of money, wages are called nominal or money wage. It wages are paid interms of goods (necessaries, comforts and luxuries) wages are called real wages. Real wages are influenced by value of money, extra earnings additional receipts in kind, working hours, working conditions, regularity of employment, nature of the job, future prospects and occupational expenses etc.