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HARROD-DOMAR MODEL: A model economic growth developed by R. F. Harrod and E. D. Domar that seeks to explain why an economy would not grow as fast has its potential growth rate. This model is based on the notion that actual income determines the amount saving, which is determines investment, which is what affects the rate of economic growth. If saving is not enough, the potential growth rate will not be achieved. The Harrod-Domar model, developed in the 1930s, has a strong Keynesian economic flavor, both indicating that the economy does not automatically achieve its potential.
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                           INCOME RECEIVED BUT NOT EARNED: The three types of income received but not earned (IRBNE) are Social Security payments, unemployment compensation payments, and welfare payments. These are three key transfer payments from the government sector to the household sector. The basic goal of transfer payments is to transfer a portion of the income earned by the factors of production (because they HAVE income) to other members of the household sector (who presumably NEED more income than they have). IRBNE is added to national income to derive personal income. Income received but not earned (IRBNE) is income that members of the household sector have NOT rightfully "earned" by contributing to the production of gross domestic product. Members of the household sector receive this income as transfer payments from the government sector.- Social Security Payments: Social Security payments are the other side of the Social Security system. These are payments made to qualifying elderly and disabled members of the household sector. Because the payments are NOT received as a result of any current productive activity they are income received, but not earned.
- Unemployment Compensation Payments: Unemployment compensation payments are transfer payments from the government sector to unemployed members of the household sector. Unemployment compensation payments are NOT received as a result of any current productive activity. They are income received, but not earned.
- Welfare Payments: Welfare payments are transfer payments from the government sector to poor members of the household sector. Welfare payments are NOT received as a result of any current productive activity. They are income received, but not earned.
Recommended Citation:INCOME RECEIVED BUT NOT EARNED, AmosWEB Encyclonomic WEB*pedia, http://www.AmosWEB.com, AmosWEB LLC, 2000-2025. [Accessed: April 29, 2025].
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BEIGE MUNDORTLE
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Today, you are likely to spend a great deal of time watching the shopping channel trying to buy either a handcrafted bird feeder or a New York Yankees baseball cap. Be on the lookout for fairy dust that tastes like salt.
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The portion of aggregate output U.S. citizens pay in taxes (30%) is less than the other six leading industrialized nations -- Britain, Canada, France, Germany, Italy, or Japan.
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"The roots of education are bitter, but the fruit is sweet." -- Aristotle
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JLE
Journal of Law and Economics
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