Useful Info

Nominal wage is the wage (the money workers receive as compensation for their labor) expressed based on current money without considering the rise in prices. In other words, it refers to the monetary amount received by workers as compensation for their labor. Real wage, which is distinguished from nominal wage, is expressed as the actual value of money taking into account the rise in prices, and it is the monetary amount obtained by dividing the nominal wage by the price index. Therefore, the living standard of workers is determined by the real wage. Real wage = (Nominal wage / Price index) × 100 Therefore, if prices rise while the wage remains constant, the real wage decreases, but the nominal wage does not change.