Earned and capital income

Updated: 26 Feb 2021
Next update: 23 Jun 2021

Compensation of employees is defined as the total remuneration, in cash or in kind, payable by an employer to an employee in return for work done by the latter during the accounting period. Property income is the income receivable by the owner of a financial asset or a tangible non-produced asset in return for providing funds to, or putting the tangible non-produced asset at the disposal of, another institutional unit.

By examining the development of labour and capital, i.e. the functional income distribution, it is possible make a broad analysis of economic growth as well as the development of income distribution and the labour market. Measuring the income distribution of the economy enables an assessment to be made of the development of national income and the factors influencing it. Besides the measurement of income distribution, the income distribution development indicator also describes the relationship and balance between labour productivity and labour costs. Labour productivity and real labour costs should grow at the same rate to ensure that businesses’ internal income distribution remains stable.