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Income Balance

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Income balance is an accounting document that collects all income and payments, which are generated by the productive factors of a country. These productive factors are capital and labor; They can be nationals abroad or non-residents in the country itself.

This accounting document records all operations derived from trade in goods and services, as well as operations derived from capital movements, between some countries and others. This balance is a sub-account of the current account balance, which in turn belongs to the balance of payments.

Characteristics of the income balance

The different types of transactions are structured in three large accounts: Current account balance, capital balance and financial balance. The income balance is part of the current account balance. The balance set will always be balanced, that is, the balance of the balance of payments is always zero.

The income balance is composed of two sub-scales: labor income and capital income.

- The labor income, includes the balance between the income paid by the foreigner to internal residents and the income paid by the country itself to foreign residents.
- Capital income refers to income and payments derived from the returns of capital movements (dividend and interest).

Income balance example

An example of work income that's included in the income balance would be, for example, the remuneration of border, seasonal and seasonal workers.

An example of the capital income that's included in the balance of income would be, for example, interest, dividends or benefits, which are generated by each of the items included in the financial account (direct investments, investments in portfolio and other investments).

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