Factor income is the profit that results from the exploitation of various resources or factors of production. These factors include labor, the income received from it is called wages, land rent, interest on capital, and entrepreneurial skills that result in entrepreneurial profit. Profits from personal labor activity and farming also serve as factor income. They directly depend on the factors that are used in production to make a profit.

Basic moments

Any economic resource has its owner. They either consume them, or, what happens more often, sell them in markets, receiving income for it. Buyers of these resources (mostly firms or enterprises) pay for them from the income that they also receive for the resources. It follows that income is income from sales of products and other economic resources.

Types of factor income

There is a separate classification for this economic concept. Factor income is income coming from received resources or from factors of production. Their owners receive the following income:

Firms in economic life do not always have the opportunity to separate the listed types of factor income, because they are often combined with income from product sales.

Factor production and factor income are the basis of the activities of any organization and personal economy. To release and then sell products, you need a full range of tools and conditions. In other words, a number of factors of production are needed. In addition to the listed types, they also include information. IN last years it is one of the main factors and is gaining more and more popularity, since only that company is competitive, which has the opportunity to own fresh, truthful, relevant and complete information about the market.

In general, production factors include those objects that determine the possibilities of economic activity, as well as its effectiveness. In other words, this is something that production and sales of products cannot do without.

Basic theories

The main approaches to studying factor production and factor income:

• Marxist theory. This is a doctrine that identifies the following factors of production: labor or labor, objects of labor (parts, raw materials, materials), personal (experience, skills and knowledge) and material (tools) means labor activity.
• Marginalist theory, which identifies factors such as labor, capital, land, and entrepreneurial ability.

Factors of production

Marginalist (or Western, neoclassical) theory identifies four groups of production factors. These include:

IN modern world highlight the fifth factor - information. This means its timely receipt and further use. Important role plays scientific and technological progress, culture, politics and social environment.

Factor income

Factor markets and factor incomes are closely interrelated with each other.

In market conditions, each factor of production is freely sold and bought in order to bring factor income to its owners. These include:

• Rent is the income generated by the land factor. Regular payments for the use of the owner's property. The owner himself does not need to make any effort to generate income. For example, rent for a plot or housing. A person who lives off rent is called a rentier.
• Interest is income from the capital factor. In other words, the return on the use of capital funds.
• Wages are income from the labor factor. It is payment to a hired worker for work.
• Profit is the income from the factor of entrepreneurial ability. If you subtract all expenses from total income, you get profit. Obtaining it is the goal of any organization and commercial company.

Functional distribution of factor income

The problem of distribution and formation of factor income is of great interest in economic theory. If for the owners some factors of production are income, then for the buyer they are costs. If for the owners work force While wages are income, for an organization they are production costs.

In a broad sense, net factor income is cash that are received as a result of economic activity per unit of time. Income is the result of the work of a company or enterprise, individual or society, expressed in monetary terms.

Types of income

Factor incomes are classified according to various criteria. Based on the recipient, the following income options are distinguished:

• population;
• enterprises;
• states;
• the whole society (national income).

The totality of these incomes determines the highest demand of society. Based on the amount of income received and actually available, they distinguish:

Factor income that enterprises receive from sales of manufactured products is distributed based on a certain dependence of production factors. Wages are formed thanks to the labor invested, rent is the value of the land that is used, interest or profit is the amount of capital used, and business income through entrepreneurial skills. These forms of factor income in market economy act as prices of production factors.

Entrepreneurial income

This factor is considered as the final result of the distribution of the organization’s profit, as well as as a reward for the manifestation of entrepreneurial abilities.

Business income is understood as that part of the profit that remains at disposal after paying interest on the capital borrowed. Since the credit system began to develop, profits have been divided into business income and interest.

Entrepreneurial income implies:

• good profit, that is, decent remuneration for the entrepreneur, which is necessary to attract and maintain activities in the right direction;
• income that is received on top of normal profit, in other words, it is economic profit.

Profit

Profit is the main motive, as well as the main indicator of the effectiveness of each organization. In other words, profit as factor income is the goal of all production, towards which all resources are directed. Its source is the creative activity of the entrepreneur.

The formation of factor income occurs due to many factors, which include Natural resources, human labor, information Technology and individual characteristics of the entrepreneur.

Topic 17. Factor income: rent, interest, profit

Material factors of production - land and capital - acquire a price (land rent and interest) in the corresponding markets, which is the income of the owners of these factors of production. As for income for such a factor of production as entrepreneurship (profit), its essence and nature are fundamentally different from the essence and nature of land rent and interest. This topic is devoted to the analysis of these three factor incomes.
Main questions of the topic:

Question 1. Land rent.
Question 2. Interest on capital.
Question 3. Profit.

Land (T) is a resource that is not produced, but exists as natural object. Please note that the concept of “land” includes not just land area, but also forests, minerals, water resources and so on. As a factor of production, land is non-reproducible and therefore quantitatively limited, of varying quality (in terms of fertility, richness of deposits, location), immovable, and characterized by a long period of use.
The price of land services is called land rent. In general, rent is income from any factor of production, the supply of which is inelastic. Land rent is the income of the land owner. Like any price, land rent is formed on the market - the land market, which is characterized by a completely inelastic supply. The purchase and sale of land services is carried out by leasing land.
The characteristics of land as a factor of production and, above all, its irreproducibility explain the inelasticity of its supply. In every this moment the amount of land offered by its owners is strictly fixed. Of course, in the long term it can be increased by developing virgin lands, draining swamps, etc., but in the short and long term the supply of land is constant.
Since the supply of land is inelastic, rent depends entirely on the demand presented by land users. In turn, the demand for land, as for any resource, depends on the productivity (productivity) of the land and on the demand for products produced with the help of the land. If the demand for agricultural products increases, then the demand for land and its price increase. As a famous 19th century economist wrote:
E. Boehm-Baver, “It’s not because Tokaj wine is expensive because Tokaj vineyards are expensive, but vice versa.”
The formation of land rent is shown in Fig. 17.1.

Suppose that initially demand is D1 and rent is R1. When the demand for land increases and its supply remains constant, land users are willing to pay a higher price for land services - land rent increases (R2>R1); when demand decreases, landowners cannot rent out all the land and are forced to reduce land rent (R3 In practice, ground rent is collected on the basis of a lease agreement as part of the rent, which, in addition to ground rent, may include depreciation of structures and buildings located on the land, interest on capital invested in the land, etc.
Land rent is the price of land services and the income of the land owner for a certain period of time, but in a market economy the land itself, as a capital good, is bought and sold. What is the price of land as a capital good? At what price will the owner of the land sell it?
Since, by owning land, the owner constantly receives income in the form of rent, then by selling the land, he actually sells the opportunity to constantly receive income, so he will give up his plot for such an amount that, being deposited in the bank, will bring him an income no less than the rent he receives.
The price of land (Z) represents the capitalized (converted into capital) land rent.
R
Z = x 100%, i
where R is the annual rent;
i - bank interest.
Let's assume that the owner of the land received an annual income (rent) equal to 100 thousand den. units, the bank pays 10% per annum on deposits. It is obvious that the owner of the land will sell his plot for an amount not less than 1 million den. units, since by depositing this amount in the bank, he will receive income at the level of ground rent.
In practice, along with the amount of rent and the level of bank interest, the price of land is influenced by many other factors: an increase in demand for non-agricultural land, inflation (with inflation, the demand for land, as well as for real estate in general, increases), scientific and technical progress, etc.
In general, in the 20th century. In market economy countries, there was a steady tendency towards an increase in land prices, caused by the intensive process of urbanization and inflation, which became chronic in almost all countries.
Self-test questions

1. What are the features of land as a factor of production?
2. Describe the demand for land. What does it depend on? Why is the supply of land completely inelastic?
3. What is ground rent? How is it formed and what does it depend on?
4. What is the difference between ground rent and land price?
5. How is the price of land determined? What factors influence the price of land?

The concept of "capital" is used in the broad and narrow sense of the word. In a broad sense, “capital” is any value that generates income (real estate and equipment, savings, securities, etc.). In the narrow sense of the word, capital (real, physical capital) is one of the factors of production, which is a stock of produced goods used in the production of other goods (buildings, machines, equipment, raw materials, materials, etc.).
Depending on the nature of the turnover, real capital is divided into fixed and circulating capital.
In terms of physical composition, fixed capital includes buildings, structures, machinery, equipment, etc. Elements of fixed capital:

1. used for many production cycles;
2. during the production process they are used entirely and do not change their natural and material form;
3. subject to replacement (reimbursement) after several production cycles;
4. transfer their cost to finished products in parts.

Working capital by physical composition includes
raw materials, basic and auxiliary materials. Elements of working capital:

1. used during one production cycle;
2. during the production process they change their natural material form;
3. subject to replacement (reimbursement) after each production cycle;
4. transfer their cost to finished products completely during one production cycle.

Fixed capital is subject to physical and moral wear and tear.
Physical wear and tear is a decrease in the value of fixed capital elements as a result of their aging (wear and tear) during use in production or non-use at all (corrosion, rotting, etc.).
Obsolescence is the depreciation of elements of fixed capital due to the reduction in the cost of production of similar machines, machines, etc. or due to the emergence of new, more productive equipment, as a result of which existing equipment loses its economic efficiency.
Depreciation of fixed capital as a result of wear and tear is accompanied by a transfer of the value of elements of fixed capital to finished products (depreciation).
Depreciation is the process of transferring the cost of elements of fixed capital as they wear out to the product produced with their help.
To compensate for worn-out elements of fixed capital, firms make depreciation deductions, which are included in production costs. After the sale of products, depreciation charges are accumulated in the form of a depreciation fund intended for the repair and replacement of worn-out elements of fixed capital.
Deductions to the depreciation fund are made on the basis of legally established depreciation rates (N0), which are the reciprocal of the service life.
No = (1: t) x 100%,
where t is the service life.
So, for example, if a machine costs 50 thousand rubles. and its service life is 5 years, then the depreciation rate will be 20% [(1: 5) x 100%], and the annual depreciation charge will be 10,000 rubles. (50000x0.2). Depreciation charges are part of production costs.
Having characterized the features of real capital, let us consider the income that capital brings to its owner as a factor of production.
The income that capital can generate as a result of its use corresponds to the price paid for the use of money for a certain period of time (usually a year).
As already noted, money and monetary capital are not a production factor; they are not capable of directly producing goods or services, but they are a condition for the acquisition of factors of production, including real capital. Entrepreneurs “buy” money (take out loans) to acquire the physical capital needed to create goods and services. Hence: the demand for capital is the demand for borrowed funds. It is obvious that, using real capital, an entrepreneur must provide such income from its use that will allow him to pay for the borrowed money. The price paid for the use of money for a certain time is called interest (i). Thus, interest on the use of money and income on capital are the same value. It does not matter whether the entrepreneur uses borrowed capital or not. Using only his own capital, he must still receive a return on it of at least interest.
According to neoclassical theory, interest is a payment for the right to receive resources at your disposal today, i.e. before funds are accumulated to purchase these resources.
Having resources today allows you to take actions that will provide higher income in the future, so today's productive resources are valued more than future ones.
It should be noted that the fee for the use of money is usually considered not as an absolute value, but as a percentage of the income received from the provision of money to the total amount of money provided.
R
i = —^ x 100%,
C
where i is the rate (rate) of interest on capital;
Rc - return on capital;
C - capital.
If the loan is equal to 100 thousand den. units, and the annual income is 5 thousand den. units, then the interest rate (interest rate) will be 5% [(5000: 100000) x 100%].
The interest rate is determined in the money market and depends on the relationship between the demand for money presented by the business and the supply of money. Distinguish between nominal and real interest rates:
- nominal interest rate (i) is a monetary interest rate that characterizes the income received at current prices;
- real interest rate (r) is the interest rate adjusted for inflation, i.e. it characterizes income in constant prices:
r = i - n,
where n is the percentage of inflation.
Note that the real interest rate may be negative. If money is loaned at 20% per annum, and the annual inflation rate is 30%, then the interest rate will be negative.
The interest rate is used in the process of discounting - bringing income and expenses distributed over time to a single point in time.
Discounting is carried out according to the formula:
PV = FVn: (1 + i)n,
where PV is today's, current value (money today);
FVn - value after n periods (money after n years);
i - discount rate (bank interest rate).
Let's assume that the bank interest rate is 10% per annum and that, after graduating from college in five years, you will first receive a salary equal to 10 thousand rubles. What is the value of your future salary today? It is equal to 6211 rubles. .
The need for discounting arises whenever you need to compare today's expenses with future income. This problem arises when making investment decisions. By investing today, we will receive income in the future, so it is necessary to compare today's expenses with future income. To do this, it is necessary to determine the today's analog (today's value) of the amount that will be received after a certain period at the existing interest rate.
Comparing the current value of future income with the costs of investments allows you to decide on their feasibility.
Self-test questions

1. What is meant by capital in the broad and narrow sense of the word?
2. How does fixed capital differ from working capital?
3. What is physical and moral wear and tear and depreciation?
4. Why is the return on capital equal to interest on loans? How is the essence of interest theoretically explained?
5. What are nominal and real interest rates?
6. What is the essence of the discounting process?
7. In what cases is investment appropriate?

Profit is the income received from the investment of such a factor of production as entrepreneurial activity. Unlike wages, interest and rent, profit is not the equilibrium price of a resource; it is not formed on the market. The nature of profit is different.
An entrepreneur, combining factors of production, organizing it, introducing innovations, taking risks, must receive a reward for all this. And this reward is economic (net) profit - the remainder of total income after deducting all production costs, both external and internal - lost when using one’s own resources (capital, land, entrepreneurial abilities). This balance is the income of the entrepreneur.
There are many theories explaining the nature of this residue.
Profit is the price for risk. The dynamic nature of a market economy gives it a character of uncertainty. An entrepreneur operating in conditions of uncertainty, making certain business decisions, may incur various types of losses due to circumstances beyond his control, therefore profit is considered as a reward for taking on an uninsurable risk.
Profit is the entrepreneur's reward for postponing personal consumption of his own capital (abstinence theory).
Profit is the reward for innovation and the introduction of technical improvements. An integral element of entrepreneurial activity is innovation, and profit is the reward for searching, finding, and introducing more advanced production methods.
Profit is the income generated by the existence of a monopoly, i.e. profit is “monopoly income” generated by artificial restrictions. By limiting the output of products, increasing their prices and preventing competitors from entering the market, an entrepreneur can constantly make a profit.
It seems that profits cannot be sustained, since competition leads to a leveling of the economic playing field, and the advantages of individual firms, which enable them to make economic profits, gradually spread everywhere. However, the conditions that generate profit (initiative, innovation, risk, monopoly position) are continuously reproduced by millions of entrepreneurs, turning profit into a constant phenomenon.
Profit in a market economy performs a number of important functions. Profit:

1. is an indicator of production efficiency. The presence of profit, other things being equal, indicates that the results of management exceed the costs incurred;
2. stimulates the most efficient use of resources. It is the desire for profit that forces entrepreneurs to introduce the latest production technologies and improve the organization of production. As F. Hayek wrote, “the desire for profit is precisely what allows for the most efficient use of resources”;
3. performs a distribution function, facilitating the movement of resources from one application area to another. The presence in any industry of profits exceeding its normal level attracts new entrepreneurs and leads to an overflow of resources and a corresponding expansion of production.
4. finally, profit serves as a source of accumulation and financing for further development and improvement of production, creating conditions for making profit in the future.

Profit is the driving incentive of a market economy. Firms seeking to maximize profits are objectively forced to produce goods that are in demand and at the lowest cost. Thus, profit serves the main economic purpose - meeting the needs of people with limited resources.

1. How does profit differ from other factor income?
2. Profit is the return on which factor of production?
3. What is economic (net) profit and how is it calculated?
4. What interpretations of the essence of profit exist?
5. Name the main functions performed by profit.

Basic concepts and terms

Land, supply of land, demand for land, land rent, rent, price of land, capital, real capital, fixed capital, working capital, physical depreciation of capital, obsolescence of capital, depreciation, depreciation charges, loan interest, interest rate (interest rate ), neoclassical theory of interest, nominal interest rate, real interest rate, discounting, investment and discounted earnings, profit, theories of profit, profit functions.

1. The specificity of land as a non-reproducible, variable-quality, non-movable factor of production predetermines the complete inelasticity of its supply. Under these conditions, land rent (the price of land services) is determined by the demand for land. In turn, demand depends on the productivity (productivity) of the land and the demand for agricultural products. The price of land as a capital good is capitalized ground rent and is equal to the amount of money that, when deposited in the bank, will generate income equal to ground rent.
2. Capital as a factor of production is economic goods used to produce other goods. Depending on the nature of turnover, capital is divided into fixed and circulating capital. Elements of fixed capital are used over many production cycles, do not change their natural form, transfer their value to finished products in parts, and are reimbursed after wear and tear. Elements of working capital are used during one production cycle, change their natural form, and completely transfer their value to the finished product during one cycle. Fixed capital is subject to physical wear and tear (a decrease in the value of elements of fixed capital as a result of their wear) and obsolescence - depreciation due to the emergence of new, more productive equipment or cheaper production of existing equipment. The depreciation of fixed capital as a result of wear and tear is accompanied by depreciation - the process of transferring the value of fixed capital to the product produced with their help. Depreciation is part of production costs. After the sale of products, depreciation charges are accumulated in the form of a depreciation fund intended for the repair and replacement of worn-out elements of fixed capital.
3. Return on capital is interest - the price paid for the use of money for a certain time. According to neoclassical theory, interest is the payment for the opportunity to use resources today. The interest rate is the ratio of the return on capital to the amount of capital multiplied by 100%. The nominal interest rate characterizes the income received at current prices; The real interest rate characterizes income at constant prices. The interest rate is used in the process of discounting - determining today's value of future income.
4. Entrepreneurship as a factor of production is charged with income in the form of net economic profit, equal to the difference between sales revenue and economic production costs (external plus internal costs, including normal profit). There are different interpretations of the essence of profit. It is considered as: a payment for risk, an entrepreneur’s reward for innovation or for postponing personal consumption, income generated by the monopoly position of the company, etc. Profit performs the function of distributing limited resources of society, stimulates their effective use, and creates a source of further development and improvement of production.

The concepts of “factors of production” and “factor income” are interconnected, and this article will display this relationship.

Factors of production can be represented by the following, using which:

The organization of production of goods is carried out;

The volumes of finished products are regulated.

In turn, they can be classified according to the following characteristics: natural, labor, capital, current, information and financial.

Based on the listed types of resources, it is necessary to briefly describe each of them. For example, labor can be represented as a combination of mental and physical abilities used by people in the process of creating goods. Its main characteristics are:

Intensity, determined by the amount of labor consumed over a given period of time;

Productivity measured by the number of products produced per unit of time.

This includes land, which is divided into:

Areas where production facilities are located;

Arable lands on which various crops and crops of grains, melons, etc. are grown;

Mineral deposits.

Another important natural resource is It can only be possessed by a certain part of people performing a huge range of different functions, without which successful effective production activities are simply impossible.

The meaning of the concept of “capital” was gradually adjusted with the constant development of the economic worldview. For example, Ricciardo and Smith considered it a means of production. Other experts in the field of economics argued that it combines money and securities. Today, capital means everything that can bring income to its owner. Based on the last definition, it is divided into real, monetary and financial. However, this factor still requires some clarification. Thus, the financial component of capital in the form of shares, bonds and bank deposits cannot be classified as factors of production, since they are not directly related to the production process.

Factor income includes those obtained from the use of factors of production. When comparing them, the following indicators are formed.

From the use of labor we receive factor income - wages. Rent is the income that the owner regularly receives from the use of property and land. The interest is determined by the fee from the use of borrowed funds (loan interest) or funds invested for a certain period by the investor (deposit interest).

The concept of “net factor income” is used for funds received from abroad. In other words, this is the difference between the income that compatriots received abroad and the income of foreign citizens who received it on the territory of our country.

Factor incomes can be used in calculating many macroeconomic indicators of the state. Below are some examples.

The following factor incomes are distinguished:

Wages and other compensation for time worked to citizens;

Own income of organizations, enterprises and institutions;

Rental income;

Profit remaining after payment of wages and interest on the loan;

Net interest represented by the difference between corporations paid to others and those received from other firms.

To analyze the economic activity of any company, the following indicators are used: total (gross) income TR; average income AR; marginal revenue MR and profit.

Total (gross) income is the total income that a firm receives from selling all its products at market prices. It is defined as the product of the market price of the product and the quantity of products sold:

In the Russian economy, total income represents revenue, i.e. the cost of all products sold, and gross income is the difference between revenue and material costs (expenses) for the production and sale of products:

where MZ is material costs (cost of raw materials, materials, fuel, etc.).

Consequently, the concept of “gross income” includes part of the cost of production - labor costs and profit.

A firm operating in a perfectly competitive market has no ability to influence price. The price for her is a given value. Therefore, total income depends only on the firm's output.

Another phenomenon in the market of imperfect competition. Here the firm can influence the price. To sell more products, it is forced to reduce the price. Thus, a firm's gross income depends on price and production volume.

Average AR revenue is the revenue generated from the sale of a unit of product. It is defined as the ratio of total income TR to the number of products sold

The average income in size is actually equal to the market price.

Marginal revenue MR is the increase in revenue from sales growth per one additional unit of output. It is defined as the ratio of the increase in total income TR to the increase in the quantity of output Q.

This is receiving additional income from the sale of an additional unit of product. It shows the degree of efficiency of the company.

Taking into account the participation of production factors in the formation of income, factor and disposable income are distinguished.

Factor incomes are primary incomes. They are formed from the sale of factors of production (capital, labor, land) and in the process of their use. Factor incomes appear in the following forms: wages are remuneration for the labor of workers; as rent is the provision of premises, equipment, land for rent; as interest is a reward for capital; how profit is an assessment of the work of an entrepreneur; dividends, etc.

Factor incomes are divided into two groups:

• * income based on labor, i.e. labor origin. These are the incomes of workers and employees (wages), entrepreneurs (profit);
• * income of unearned origin. These include interest on capital; interest on stocks, bonds, current accounts; rent for the provided property and land for rent, etc.

Disposable income is final (net) income or factor income after paying direct taxes, social security contributions (pensions, benefits, scholarships, etc.). They are used by an individual or family at their own discretion.

Income is subject to distribution among various categories of workers. The well-being of people largely depends on the level of income received. Therefore, correct, fair distribution of income is very important. They must be distributed according to the use of factors of production. Thus, from the use of labor, the employees of the company receive income in the form of wages, and from the capital, the owners of capital receive a percentage; from land owners of land land rent, etc.

At the same time, these incomes represent the prices of production factors, i.e., these incomes are used to purchase capital, land, labor, etc. As a result, it turns out that the distribution of monetary income is also carried out through the prices of production factors.

4. Interest and dividend.

5. Profit as income from business activities.

1. Essence and classification of income.

To analyze the economic activity of any company, the following indicators are used: total (gross) income TR; average income AR; marginal revenue M.R. and profit.

Total (gross) income - This is the total income that the company receives from the sale of all products at market prices. It is defined as the product of the market price of the product and the quantity of products sold:

TR= P x Q.

In the Russian economy, total income represents revenue, ᴛ.ᴇ. the cost of all products sold, and gross income is the difference between revenue and material costs (expenses) for production and sales

products:

TR=P x Q - M3,

where MZ is material costs (cost of raw materials, materials, fuel, etc.).

Consequently, the concept of “gross income” includes part of the cost of production - labor costs and profit.

A company operating on perfectly competitive market has no ability to influence the price. The price for her is a given value. Therefore, total income depends only on the firm's production volume.

Another phenomenon on imperfectly competitive market. Here the firm can influence the price. To sell more products, it is forced to reduce the price. However, the firm's gross income depends on price and production volume.

Average AR income - This is the income received from the sale of a unit of production. It is defined as the ratio of total income TR to the number of products sold

The average income in size is actually equal to the market price.

Marginal Revenue MR - This is the increase in income from sales growth per additional unit of production. It is defined as the ratio of the increase in total income TR to an increase in the number of products Q.

This is receiving additional income from the sale of an additional unit of product. It shows the degree of efficiency of the company.

Taking into account the participation of production factors in the formation of income, factor and disposable income are distinguished.

Factor income- These are primary incomes. Οʜᴎ are formed from the sale of factors of production (capital, labor, land) and in the process of their use. Factor incomes appear in the following forms: wages are remuneration for the labor of workers; as rent is the provision of premises, equipment, land for rent; as interest is a reward for capital; how profit is an assessment of the work of an entrepreneur; dividends, etc.

Factor incomes are divided into two groups:

‣‣‣ labor based incomeᴛ.ᴇ. labor origin. These are the incomes of workers and employees (wages), entrepreneurs (profit);

‣‣‣ income of unearned origin. These include interest on capital; interest on stocks, bonds, current accounts; rent for the provided property and land for rent, etc.

Disposable income - these are final (net) incomes or factor incomes after paying direct taxes, social insurance contributions (pensions, benefits, scholarships, etc.). Οʜᴎ are used by an individual or family at their own discretion.

Income is subject to distribution between different categories of employees. The well-being of people largely depends on the level of income received. For this reason, correct, fair distribution of income is very important. Οʜᴎ should be distributed based on the use of factors of production. Thus, from the use of labor, the employees of the company receive income in the form of wages, and from the capital, the owners of capital receive a percentage; from land owners of land land rent, etc.

At the same time, these incomes represent the prices of production factors, i.e., these incomes are used to purchase capital, land, labor, etc. As a result, it turns out that the distribution of monetary income is also carried out through the prices of production factors.

2. Salary and its characteristics.

Wages make up the majority of income and significantly influence the amount of people's consumption. The share of wages in GDP in Russia is 23%, and in the USA -59%.

In the economic literature there are various approaches to determining the essence of remuneration for the work of employees (wages) and the factors that determine it at the firm or industry level.

A. Smith and D. Ricardo believed that labor is a commodity and has a natural price, which is determined by production costs in the form of the cost of subsistence (food, clothing, shoes) necessary for the worker and his family. The physical minimum of these means of subsistence is determined taking into account historical, cultural and national differences.

The Marxist theory of wages differentiated the concepts work And ʼʼworking stationʼʼ. She proved that wages are a transformed form of the value of the commodity “labor power”, and not labor. Therefore, labor and labor power are different concepts. Labor - purposeful activity of people, it does not exist before the start of production or at the time of purchase and sale of labor power. It follows that labor is the use of labor power to produce a product. A work force - This is the totality of a person’s physical and spiritual abilities, or his ability to work. Labor arises when labor power is combined with the means of production.

Social theory of wages M. Tugan-Baranovsky considers wages as the share of the working class in the social product.

In modern economic theory there is no distinction between labor and labor power; they are identical concepts. Labor is clearly considered a factor of production, and salary - the price of using the employee's labor.

In terms of salary level, there are nominal and real wages.

Nominal salary - This is the amount of money workers receive from the cash register for their daily, weekly or monthly work. In 2002 ᴦ. the nominal average monthly salary was 4,426 rubles, or increased compared to this figure for 2001. by 35%, and for 1999 ᴦ. 2.9 times. At the same time, it is impossible to judge the level of consumption and well-being of people by the level of wages. There is a real salary for this.

Real salary - This is the nominal salary, minus various taxes and payments, taking into account inflation. It depends on the price level for goods and services. Consequently, nominal wages can grow, and at the same time real wages can grow, and vice versa. The cost of living, or the standard of living of the population, depends on real wages. According to Goskomstat, real wages in Russia in 2002 ᴦ. increased against that in 2001. by 16.6%, and compared with the same indicator for 1999 ᴦ. - 1.7 times.

Main forms wages are time-based (hourly) and piece-rate (piece).

Time salary - This is the salary received based on the time worked. There are daily, weekly, monthly wages. The unit of measurement is price of an hour (labor)- hourly rate.

Working time 8 hours

The tariff rate is applied when the results of labor cannot be accurately measured, but are determined by the performance of duties. This includes official salaries of engineers,

employees, managers, electricians, teachers, doctors, etc. According to UN standards, the hourly wage should not be less than $3; in Russia one can only dream of this. In Japan, the USA, Germany, Sweden, Great Britain and France, hourly wages in industry are $15-22.

Time-based wages allow entrepreneurs to maneuver the length of the working day and the intensity of work, to achieve an actual reduction in wages while increasing the intensity of work. For this reason, labor laws must be strictly observed.

Piece salary - This is earnings that depend on the number of goods and services produced or the volume of work performed. Its unit of measurement is unit price - price for products. It is found based on 1 hour of time wages and the amount of production per 1 hour. The use of piecework wages stimulates the growth of productivity and labor intensity, increases competition among workers to maintain jobs, increases the level of wages, as well as unemployment, etc.

Each of the basic forms of wages has its own system, ᴛ.ᴇ. types of wages that are aimed at stimulating labor productivity, improving the skills of workers and, in general, increasing production efficiency.

With a simple time system wages, the amount of wages is determined by multiplying the hourly rate of a given category by the amount of time worked.

With a time-bonus system a bonus is added to simple time wages for additional production results (improved product quality, high-quality work, etc.).

Piecework wages have the following systems: direct piecework, piecework-bonus, piecework-progressive, piecework, individual, collective, etc.

Direct piecework salary determined based on the volume of work performed or products produced at established uniform prices.

Piece-bonus salary assumes that a bonus is added to direct piecework wages for additional results (high quality of the product, saving on raw materials, increasing the quantity of products).

Piece-progressive salary is determined based on the volume of production, one part of which, within the norm, is paid at basic prices, and the other part, in excess of the norm, is paid at increased prices.

Chord system involves payment for the entire volume of work performed in accordance with the contract. At the same time, the deadlines can be shortened - this is the job of the builders, i.e., the workers.

There may be other individual and collective wage systems, where wages are determined based on the labor participation (LPP) of members of the work collective. Οʜᴎ are designed to link wages with the final results of labor.

The reform of the remuneration system gives enterprises (firms) the right to choose their own principles of remuneration for employees. For this reason, it is advisable to use the experience of foreign entrepreneurs who widely use the following types of wage systems: guaranteeing a minimum wage (tariff rate) even if the employee does not achieve the established level of labor productivity; changing wages ranging from minimum to maximum - in proportions depending on the achieved level of labor productivity; systems of employee profit sharing and creation of worker ownership.

In recent years, foreign companies have successfully used various systems of employee profit sharing and creation of worker ownership. Employees’ participation in profits occurs in the form of contributions to ʼʼworker fundsʼʼ shares of the current year's profit using a preferential tax regime. The creation of workers' property is carried out by investing savings from wage deductions in production on preferential terms.

Factors influencing the amount of wages are: productivity and intensity of labor, quality of labor, qualifications of workers, complexity of labor, economic situation of the country, level of scientific and technical progress, racial and sexual discrimination, etc.

To take into account most factors influencing the level of wages, a tariff system is used. It is mandatory for state-owned enterprises and advisory in market conditions for non-state enterprises.

Tariff system includes:

‣‣‣ tariff and qualification reference books to characterize professions and types for assigning ranks;

‣‣‣ tariff rates to determine the amount of remuneration for each category;

‣‣‣ tariff schedules - this is a set of tariff categories and tariff coefficients;

‣‣‣ salary chart for engineers and employees. If in the command-administrative system the tariff conditions for remuneration were lowered from the center and controlled by the relevant ministries and departments, then in a market economy the state only adjusts the size of the all-Russian minimum wage. Many market enterprises use tariff-free wage systems. Moreover, the amount of wages depends on the results of their economic activities.

3. Rent as income of the land owner.

Land rent - land use fee.

The supply of land is completely inelastic, since its quantity is always stable and should not be increased.

Rent is one of the types of income from property. Its size is determined by the lease agreement. Land rent is the form in which land property is economically realized and brings profit.

Lease is a broader concept than rent. It includes, in addition to rent, other payments: interest, depreciation, etc.

The only factor determining rent is the demand for land. It depends on the price of the products that can be produced on a particular land and the productivity of the land itself. The points that determine the amount of rent lie at the intersection of the demand curve and the supply curve.

The additional profit arising on average and best quality plots of land forms differential land rent. Differential rent 1 associated with the natural features of the land and in connection with this it is appropriated by the owner of the land. Differential rent 2 arises due to additional capital investments in the same land plot (the use of new machines, the latest technologies, soil reclamation, etc.), which contributes to the growth of economic soil fertility. Economic soil fertility ensures an increase in agricultural yields, and this brings additional profit to the entrepreneur.

It should be emphasized that lands with worse soil and climatic characteristics do not bring differential rent to their owners. It follows that the tenants of the worst plots must receive an additional profit of another kind in order to pay the rent and appropriate the normal profit. And they receive it in the form of absolute rent.

The reason for absolute land rent is the monopoly of private ownership of land. The value of this rent determines the low level of retail prices for land plots.

There is also monopoly rent. It is based on the monopoly price at which a product of rare quality is sold. A monopoly high price is determined by the buyer’s ability to pay a high price for a rare product, which means it represents a deduction from the buyers’ income.

Land price depends on two factors: the amount of land rent brought in and bank interest. If the land rent is lower than the bank interest rate, the money will be placed in the bank. If land rent is higher than bank interest, then the likelihood of investing in land increases.

The price of land is capitalized rent, i.e. rent converted into money capital, generating income in the form of interest. In general, the price of land is rising all over the world, as the amount of rent increases, the interest rate decreases and the demand for land increases

4. Interest and dividend.

Percent - this is a type of income. In practice, it can appear in the form of loan interest on capital, entrepreneur’s profit, a premium to the cost of factors of production, rent for the rental of property and land, dividends on securities, etc.

There are two concepts of interest: Marxist and neoclassical.

Marxist concept considers interest as a form (part) of surplus value. Its emergence is due to the fact that the borrower of capital, having produced surplus value, divides it into two parts: percent, given to the creditor and business income(profit) appropriated by the borrower himself. Consequently, interest acts as the irrational price of loan capital, ᴛ.ᴇ. it does not fully express the cost of loan capital. The only source of interest is labor.

Neoclassical concept(Samuelson, Fischer, Böhm-Bawerk) interest is represented as the difference between the value of today's and future goods (income). It is believed that today's goods (money) are usually valued higher than future benefits. Thus, by refusing today's benefits by providing them on credit, the owner of these benefits has the right to count on appropriate compensation - percent.

It follows that the reasons for the appearance of interest are: psychological(the value of today's goods compared to future ones); economic(current needs are more pressing and resources are limited and therefore decreasing); technological(today's goods are worth more than future ones) motives.

The owner then becomes creditor, and the recipient of benefits (money) - borrower. The borrower must pay interest on the loan received. Consequently, interest acts as a payment for the time determined by the period of receipt of the loan.

The ratio of interest in the form of a certain amount of money to the capital used is interest rate (rate of interest).

There are the following types of interest rates: market, average, nominal, real.

Market interest rate at any given moment is formed in the capital market based on supply and demand.

Average interest rate reflects the movement of the market rate over a certain period of time.

Nominal interest rate - This is the interest rate expressed in money at the current exchange rate.

Real interest rate Unlike the nominal interest rate, it takes into account the level of inflation. It is equal to the nominal interest rate minus the inflation rate.

The real interest rate is of primary importance for making investment decisions.

As is known, banks most often act as intermediaries in the movement of loan capital; in this regard, it is necessary to distinguish between deposit and loan interest rates. Deposit interest rates- these are payment standards for bank deposits (depositors’ interest is calculated based on them). Loan interest rates - These are the standards for fees for using a bank loan. The level of loan interest rates is always higher than deposit interest rates. Due to their difference, the bank covers its costs and makes a profit.

In general, the interest rate is under the influence of the state and is an important instrument of state regulation of the economy.

Dividend is income from shares.

A share is a security that indicates that its holder has contributed a certain share to the development of the enterprise and gives the right to participate in profits.

The size of the dividend affects the stock price.

The stock price is directly dependent on the dividend received and inversely dependent on the interest rate.

Factor income - concept and types. Classification and features of the category "Factor income" 2017, 2018.