Wage is the price paid to the labor for the use of his/her service in the production. In economics, the wage is the reward paid to the worker for his/her mental or physical work.
According to F. Benham, “A wage may be defined as the sum of money paid under contract by an employer to the worker for services rendered.”
There are mainly two concepts of wage which are explained as follows:-
1. Money wage or nominal wage:-
Money wage is the wage received by labor in the form of money. It is also known as nominal wage. Money wage does not include extra facilities provided to the labor like accommodation, health care, children education allowance, transportation facilities, clothes allowance, insurance facilities, etc.
2. Real wage:-
Real wage refers to the wage in terms of goods and services. It is the sum of goods and services that money wage can buy and extra benefits of labor’s occupation i.e. the number of necessaries, comfort, and luxury supply, etc. Real wage depends on various factors like money wage, price level, extra earning possibility, nature of work, regularity and security of work, working environment, etc.