ABSTRACT
This chapter attempts to find out the reasons within the basic framework of demand and supply of labour. It explores the factors of determination of real wages within the neoclassical demand and supply framework thus ignoring various institutional and non-institutional factors. The chapter estimates the growth rate of real wages in 14 major states of the Indian economy for the period 1960-1 to 2009-10. The growth of real wages of agricultural workers has been worked out by taking a trend growth in real wages. The chapter reviews some of the relevant studies that detail the factors explaining variation in real wages within the demand and supply framework. It presents an analysis of the variables of determinants of real wages. The chapter deals with the model and its interpretation and considers the panel data analysis with fixed and random models to take into account the heterogeneity of states.
