Wage Rates in a Model of the System

In the analysis of the general wage level there are two problems which must be distinguished. The first is the determination of the money wage rate. Ordinarily there is a ‘world of monopolies’ in the labour market — trade unions, trade associations, and big companies — and the average money wage rate finally agreed upon by all parties to a wage dispute is a function of the prevailing aims of the trade unions, their relative financial and cohesive strength, the fixed cost burden of the economic sector in question, public support of either side, government intervention, and many other things. This is the special field of labour economists, and has been analysed by Professor Dunlop in his study of wage determination under trade unions.1