Understanding Earned Income: Definition and Examples

In the context of economics, "earned income" refers to income that is received in exchange for work or services performed. This can include wages, salaries, tips, and other forms of compensation that are directly tied to an individual's labor or skills.

Earned income is different from other types of income, such as investment income (which comes from assets like stocks or bonds) or government benefits (such as Social Security). Earned income is typically subject to taxes, and it is often used to calculate eligibility for certain government programs or benefits.

Some examples of earned income include:

* Wages or salaries from a full-time or part-time job
* Tips or gratuities received by waiters, bartenders, or other service workers
* Self-employment income from a small business or freelance work
* Commissions or bonuses earned through sales or performance-based incentives

In general, any income that is earned through an individual's labor or skills is considered earned income.