Factor Income

See: Factor.

Are you a landlord? A CEO with workers working under you? Do you sell machinery?

Congratulations...you are earning factor income!

Factor income is income made via the selling of the factors of production, i.e. the things firms need to make other things. The big three factors of production are land, labor, and capital.

Factor income isn’t super relevant for microeconomics, but it does have macroeconomic uses. In macroeconomics, economists can analyze factor income as it relates to GDP, GNP, and economic growth.