Distribution Analysis — Economics STD 11 — Question

This theory was propounded by the American economist F.A. Walker in 1875, in his book political economy. According to this theory, wage is the residual portion after paying the remuneration of all the other three factors namely land capital and organization.Criticisms:

1. This theory does not explain the role of trade unions can secure higher wages for workers.
2. The demand-side of labour in the determination of wages needs to be considered.