Nominal Wage and Real Wage

Nominal wage or money wage refers to the amount of earnings of labourer in terms of money in exchange for the work done in production. It is the total quantity of money received by a labourer during a period of time.

Wages of labour in terms of goods and services is called real wage. The goods and services which a labourer purchases with his money wage is real wage. In addition to this, if the worker gets free accommodation, free medical facilities, free telephone services etc., then, these facilities are to be taken into account while considering real wage. Real wage is a broader concept. Money wage is only a part of real wage. Thus wage refers to the benefits enjoyed by a worker both in terms of cash and kind. It is the real wage which determines the standard of living of the workers.