Also known as net operating surplus, this is the return on the capital deployed by companies. The difference with the gross operating surplus is depreciation. Depreciation is the decline in the value of the capital assets used in the production process over the course of a year or more. Capital assets include buildings and computers, for instance, but also software.
The net operating surplus is used to calculate the labour income share because it provides a better picture of the income available for investment or savings. This is because it takes into account the depreciation of capital assets and the investment in replacements that is required in order to maintain production capacity.
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