Factor Income - Explained
What is Factor Income?
If you still have questions or prefer to get help directly from an agent, please submit a request.
We’ll get back to you as soon as possible.
- Marketing, Advertising, Sales & PR
- Accounting, Taxation, and Reporting
- Professionalism & Career Development
Law, Transactions, & Risk Management
Government, Legal System, Administrative Law, & Constitutional Law Legal Disputes - Civil & Criminal Law Agency Law HR, Employment, Labor, & Discrimination Business Entities, Corporate Governance & Ownership Business Transactions, Antitrust, & Securities Law Real Estate, Personal, & Intellectual Property Commercial Law: Contract, Payments, Security Interests, & Bankruptcy Consumer Protection Insurance & Risk Management Immigration Law Environmental Protection Law Inheritance, Estates, and Trusts
- Business Management & Operations
- Economics, Finance, & Analytics
Table of ContentsWhat is Factor Income?How is Factor Income Used?Academic Research on Factor Income
What is Factor Income?
An income derived from any factor of production is called a factor income. There are four factors of production, they are; Land, capital, labor and enterprise. Any return received or income generated on these factors of production is the factor income. Different factors of production provide income through different means. Factor income are generated as follows; rent is generated on land, wages from labor, interest is generated on capital and profit from enterprise.
How is Factor Income Used?
Through factor income, the government of a nation can distinguish gross domestic product from gross national product. This is important in determining the income generated domestically and income generated by citizens abroad. Factor of income is also important in macroeconomic analysis. Also, since different factors of production give different rate of income, their difference can also be measured. When carrying out a country-level analysis of income, factor income is considered. For instance, varying income derived from land, labor, capital and enterprise are factored in when estimating the total income generated by a country over a period of time. Also, proportional distribution of income across different factors is weighed.