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Employment is the most important factor of every economy. Do you agree?

From macroeconomic viewpoint, there are three important factors in an economy: national income, general price level, and employment. Although it is difficult to say which factor is the most important among them, there is no doubt that employment has a tremendous importance in the economy. Moreover, these factors are interdependent. Employment influences both general price level and national income. Ignoring the short term effect, the higher employment will result in a more stable general price level and more stable national income. Therefore, we can consider employment to be a very important factor of every economy.

Employment is a way for the people to earn income. That income will help them to manage their expenditure in the necessary goods required in daily life. The surplus income can be saved or spent in fulfilling their other wishes. Thus, employment not only prevents poverty in the people but also helps them plan for future, and enjoy their life. Savings can help the people to build up capital which can be used later in stocks, bonds, and other securities which can provide a regular flow of passive income during the old age. This can prevent old age poverty.

Similarly, employment engages people in useful work for the society and reduces their involvement in anti-social activities which might arise in the lack of employment. A significant number of criminals commit crimes because of lack of stable income source. Poverty, resulted by unemployment, is one of the major causes of people engaging in drug smuggling, robbery, prostitution, human trafficking, murder, and other serious crimes. Employment can prevent this category of criminals to a large extent, from committing crimes. As a result, employment helps to maintain peace and order in the society.

Employment engages people in some kind of income generating activity which in turn generates tax income for the government. That income is used to run the vital governmental bodies like Legislative, Executive and Judiciary bodies. Apart from that, some of the income is used in infrastructural development which facilitates the economy to grow further. Therefore, employment is important from the perspective of collecting tax revenue for the government.

The national output or income is the sum of the income of all the people of a country. The higher the individual income, the higher will be the national income. Again, the more the number of active workforce, the more will be the national income. Therefore, although they are slightly different in economic terms, the indicators of a country’s income like gross domestic product (GDP), Gross national product (GNP), etc will be positively influenced by employment.

The higher employment will result in higher production of goods and services which is measured by GDP. This will result in a relatively more stable price level in the long term. The stable price level will keep the currency stable in the foreign exchange markets, which will facilitate international trade and reduce the loss from foreign trade. The slower devaluation of a currency will make the central monetary authority more powerful and more capable to influence the economy in case of economic crisis.

To sum up, although we cannot rank employment as the most important factor among the economic factors, mostly because of its interrelation with them, we can safely conclude that it is the backbone of every country’s economy. Many strikes and revolutions have occurred because of higher rate of unemployment creating chaos in the society and administration. Employment is, thus, a sensitive issue when compared with other factors of the economy. Therefore, it is an extremely important factor of every economy.


  1. hi thanks for sharing this wonderful blog post.
    Is it possible to do a question on, ' education is the only determinant of success'

    thanks in advance

    1. Yes, it's possible. Just add, "Do you agree?" to the question.

  2. In all agree with you, employment is one of the most important indicators of a good economy.
    Read my blog:
    good luck


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