So far we were concerned with general wages. The problem of relative wages is different. Here we’ have to explain the causes of differences in wages in different employments or occupations or grades of employments and also between different persons in the same employment or grade. Wages everywhere tend to approximate to the marginal productivity of labour.
But, the marginal productivity of labour is different in different employments and grades. It varies with the degree of scarcity of each kind of labour in relation to the demand for it. or ultimately in relation to the demand for the products of each kind of labour. If there were free mobility of labour over the whole field of employment, real wage would tend to be in proportion to the relative efficiency of labour engaged in each kind of work. Real wages (not nominal wages) of workers of the same level of efficiency would tend to be the: same. If workers in one employment were getting real wages more than in proportion to their efficiency, labour would tend to move to that employment until increased supply would bring down its marginal productivity and wages. An opposite movement would take place if in an employment lower wages were paid than those justified by the relative efficiency of labour. Actually. however, labour cannot move freely from employment tu employment especially in different grades. Different grades thus tend to become “non competing groups.”