For classical economist, the lowest wage that could achieve subsistence was considered the normal wage. This did not mean that certain aspects of supply and demand did not influence the real wage. Adam Smith went into detail about how a surplus of workers can drive real wages below the normal wages and vice versa . Economists such as Robert Malthus and James Mill preached that workers would be able to keep their wages high by limiting the supply of laborers through birth control and lat...
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...en a great boost since the 1800s and there was no reason for there to be an economic analysis of the income of celebrities. Factory workers would have no control of their supply so it would be impossible for the superstar theory applied to them. Today however, the superstar theory does apply to more than just athletes, movie stars, and musicians; top financial analysts and consultants are in command of their supply and could service many consumers if they’d want to, one reason why they are usually among the top earners. The tournament theory has developed more for the middle executive level positions in which the two individuals will most likely not know that they are competing with each other and probably won’t even know each other. By using “tournaments” firms encourage workers to work harder and therefore increase output; which helps decrease firm’s stagnation.
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