Brief note Nominal and Real wages


Wages may be paid either in terms of money or in terms of goods. The amount of money paid as wages is called the nominal wage or money wage. Nominal wage is thus the monetary expression of the reward for labour.

A typist may be paid Rs. 4000/- per month for his job. This is the nominal wage or money wage. But nominal or money wage does not always indicate the true economic position of a person. On the other hand, if wages are paid in terms of goods, wages are called real wages. By real wage, we mean the amount of necessaries, comforts and luxuries that can be purchased with money wage.

In the words of Adam Smith, “The real wages of labour may be said to consist in the quantity of the necessaries and conveniences that are given for it.” It is the net total of the goods and services or benefits a worker enjoys against his job. If a worker gets a larger quantity of goods and services with his money wage, his real wage is high and he enjoys a higher standard of living.


Money wage is only a part of real wage. From practical standpoint, real wage is more important than money wage. In the words of Adam Smith, “The labourer is rich or poor, is ill or well rewarded, in proportion to the real not to the nominal price of his labour.” Real wage means the total benefits whether in cash or kind that a worker enjoys by working at a certain job.

, ,

Web Analytics Made Easy -
Kata Mutiara Kata Kata Mutiara Kata Kata Lucu Kata Mutiara Makanan Sehat Resep Masakan Kata Motivasi obat perangsang wanita