Factor income is income derived from selling the services of factors of production. In the case of labour, this means wages, plus the part of the incomes of the self-employed which is a reward for their own labour. Income from land is rents, including part of the incomes of the self-employed, and part of the imputed incomes of owner-occupiers of houses. Incomes from capital and entrepreneurship are received as dividends, interest, the retained profits of companies and the part of the incomes of the self-employed which is a return on their own capital and entrepreneurship.. It is the income earned by providing productive services.Example salary,rent,interest,etc.it is bilateral in nature and is included in the estimation of national income of the country
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