Economic Rent Law and Legal Definition
Economic rent is a payment to a factor of production such as labor, capital and land which is needed to keep it employed in its current use. It means the return earned from an economic resource above minimum cost of continuing the resource in service. It is a rent that gives a fair return on capital and expenses. It is the amount of money that an owner of a factor of production must receive to rent out that factor of production. The major elements of economic rent are monopoly rent and land rent.
Under labor law it is the minimum amount of wages that the person must receive in order to work. In capital and land terms, economic rent is the amount of money needed to attain a purpose when either land or capital is used for such purpose.
In Nassif v. Board of Supervisors, 231 Va. 472 (Va. 1986), the court held that “Economic rent is the measure to be used in capitalizing income for fair-market-value determination in tax assessments; however, contract rent is relevant evidence of economic rent.”