Transfer Earnings and Economic Rent (Labour Markets)
- Levels: A Level, IB
- Exam boards: AQA, Edexcel, OCR, IB, Eduqas, WJEC
Economic rent is any amount earned by a factor of production, such as labour, above the minimum amount they require to work in a current occupation
Transfer earnings are the minimum reward required to keep factors of production, such as labour, in its current occupation.
Diagram showing transfer earnings and economic rent at the market equilibrium wage rate
When the labour supply is inelastic, then more of the reward to labour will be economic rent rather than transfer earnings
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Geoff Riley
Geoff Riley FRSA has been teaching Economics for thirty years. He has over twenty years experience as Head of Economics at leading schools. He writes extensively and is a contributor and presenter on CPD conferences in the UK and overseas.
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