Gender pay gap in the European Union

6 2. WAGE THEORY 2.1. DEFINITION OF WAGE THEORY Wage theory refers to the income that is paid to the workers in the labour market. Adam Smith was one of the most important exponents with (The wealth of Nation) in 1776. Smith’s reflection on wages was that they were produced through offer and demand in the market and that employees are self-centred in order to meet their own needs by seeking jobs where labour forces are mostly needed. He also discussed on the standard of workers capabilities that was essential for economic growth. Economic production can turn into a way to have preferable effect in the economic environment and it does not seem to be unreasonable to explain wage as human labour. Talking about wages concerning companies and employees do not have the knowledge about workers skills and this explains about wage dynamics. In a higher prospective, if companies cannot be impartial then the wage will be inflexible, but it may not be stiff if employees can choose to have another job that can give them best offer in the marketplace, and this will make wages to increase only if there is a difference between the market and the present one. Wage dynamics tries to determine the relationship between employees and their skills, and to find out about how it works, through market image and acquisition. Becker and Mincer generated the model of human capital joint to an empiric assay. This is to show how incomes rises with a professional experience, and it can be determined only by the theory based on efficiency.