<p>I'm guessing you may be confused why we add both wages of self-employed people who run businesses, and profits of businesses, as they should be the same given that profits of businesses go to their owners.</p>

<p>The important fact is that when we calculate the profit of each business, we deduct wages (even to their owners) from their revenues and the left-over is what we add as profit.</p>

<p>Therefore, the wages deducted is added back into the GDP via wages of self-employed people.</p>

<p>Hence, there is no double-counting in the Income Approach to GDP calculations.</p>

CC BY-SA 3.0
2016-12-07T10:54:48.383Z
2016-12-07T10:54:48.383Z
Walrasian Auctioneer
<p>I am learning the way to calculate GDP with incomes. So there is labor income and capital income. One element of the labor income is incomes of the self-employed. And for  Capital income, an element is profit for business. </p>

<p>I not too clear on the definition of the self employed. Don't people who are self-employed also own their </p>

<gdp>
Profit for business owners vs. incomes of the self employed
most venerable sir
# Profit for business owners vs. incomes of the self employed

(Asked by: username_0 on 2016-12-07)

I am learning the way to calculate GDP with incomes. So there is labor income and capital income. One element of the labor income is incomes of the self-employed. And for Capital income, an element is profit for business.

I not too clear on the definition of the self employed. Don't people who are self-employed also own their

**Tags:** gdp

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## 1 answers

### Answer by username_1 on 2016-12-07. Score: 1

I'm guessing you may be confused why we add both wages of self-employed people who run businesses, and profits of businesses, as they should be the same given that profits of businesses go to their owners.

The important fact is that when we calculate the profit of each business, we deduct wages (even to their owners) from their revenues and the left-over is what we add as profit.

Therefore, the wages deducted is added back into the GDP via wages of self-employed people.

Hence, there is no double-counting in the Income Approach to GDP calculations.


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