Briefly explain the Subsistence Theory of Wages.

Question 1

Question 2

Subsistence theory was first explained by physiocrats and restated by Ricardo.
According to this theory, wage must be equal to the subsistence level of the labourer and his family.
If workers are paid higher wages they would be better off and will have large families. Hence, the population would increase, which results in increased supply of labourer and so wages will come down.
If wages are lower, there would be a reduction in population and thereby the supply of labour falls and wages increase to the subsistence level.
This theory holds that the wages of workers would not be above or below the subsistence level of the labourer and his family

MeenaKumari · Answer 1 · 2020-09-21T08:50:54+0000

Subsistence theory was first explained by physiocrats and restated by Ricardo.
According to this theory, wage must be equal to the subsistence level of the labourer and his family.
If workers are paid higher wages they would be better off and will have large families. Hence, the population would increase, which results in increased supply of labourer and so wages will come down.
If wages are lower, there would be a reduction in population and thereby the supply of labour falls and wages increase to the subsistence level.
This theory holds that the wages of workers would not be above or below the subsistence level of the labourer and his family

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