THEORY AND FACTS (STYLIZED AND OTHERWISE)
What about residual income ascribable to land? (Differential land rent or Ricardian land rent?) This return is of course income and should be added to labor income These natural resource rents arise from differences in quality of land and are not related time as are Hotelling Rents and their variants. If exhaustible resources are heterogeneous in quality, part of the rent is a dynamic or Hotelling rent and part is a differential rent. In this case the part ascribable to qualify differences should be treated as income symmetric with land rent and the part ascribable to exhaustibility should be treated as economic depreciation and placed in the output side of the accounts (i.e., netted out of the value of consumption and net accumulation of reproducible capital). The conceptual problem of separating dynamic or Hotelling rent from differential or Ricardian rent with heterogeneous exhaustible resources is dis cussed in the Introduction above and in Chapter 3 of Hartwick and Olewiler .