Question

Why is labour an important factor of production?

Answer 1

All fields of production - agriculture, industries, trade, transport, etc. - require sufficient, efficient and healthy workers.

1. Active Factor: It is an active factor of production without whose cooperation land and capital cannot produce anything.
2. Utilisation of Natural Resources: The natural resources of a country will remain underutilised in the absence of labour. Sincere, dedicated, hardworking and intelligent labour force helps the nation to march on the path of economic development.
3. Source of Consumption or Demand: Labour is the primary source of consumption. Lord Keynes believed that increase in consumption encourages investment.
4. Source of Wealth: According to socialist economists, labour is the only source of wealth. The entire wealth in a country is created by labour force.