definition of income

In the field of economics, the concept of income is undoubtedly one of the most essential and relevant elements that can be worked with. We understand by income all the profits that enter to the total set of the budget of an entity, whether public or private, individual or group. In more general terms, income is both the monetary and non-monetary elements that accumulate and that consequently generate a consumption-profit circle.

As can be seen then, the term income is related both to various economic but also social aspects since the existence or not of the same can determine the type of quality of life of a family or individual, as well as the productive capacities of a person. business or economic entity. Income also serves as an engine for future investment and growth since, apart from serving to improve living conditions, it can be used in part to maintain and increase productive dynamics. This generates a flow of elements (which may or may not be money) that enters into constant movement and dynamism.

The equation of rent or per capita income seeks to represent the percentage of income that each inhabitant of a politically definable region should receive according to its gross domestic product. In other words, using a simplified example, if a region has a gross domestic product of $ 1,000,000 per year and a population of 1,000,000 inhabitants, each inhabitant corresponds to one dollar of investment per year. This relationship between the income of each inhabitant and the gross domestic product is useful to understand the wealth of a territory rather than to know how much each individual should earn or receive, since these percentages are not easily applicable in reality.

This is finally where the idea of ​​income inequality comes into play, a characteristic element of current capitalist societies (although present throughout the history of Humanity), in which a small portion of the population owns a central part of wealth while the rest of the inhabitants are mired in misery and poverty.