Economics (0455) | Population

👋 Welcome to the Population Chapter!

This chapter is super important because people are the most valuable resource an economy has! In the context of Economic Development, we need to understand how population changes affect a country’s ability to grow, feed its citizens, and provide jobs.
We will look at how populations grow, why growth rates differ globally, and what happens when the balance of young, old, and working people shifts.

1. Factors that Affect Population Growth (5.3.1)

Population growth is simply the change in the number of people in a country over a specific time period. It is influenced by two main factors: Natural Change and Net Migration.

1.1 Natural Change: Births vs. Deaths

This measures the biological change in the population.
The key terms you need to know are:

• Birth Rate (BR): The number of live births per 1,000 people in a year.
• Death Rate (DR): The number of deaths per 1,000 people in a year.

The difference between the two gives you the Natural Rate of Increase (or Decrease):

Natural Change = Birth Rate – Death Rate

If BR > DR, there is a natural increase (population grows).
If DR > BR, there is a natural decrease (population shrinks).

1.2 Migration: Entering vs. Leaving

Migration accounts for movement across borders.

• Immigration: People entering a country.
• Emigration: People leaving a country.
• Net Migration: The difference between the number of immigrants and the number of emigrants.

Net Migration = Immigration – Emigration

Quick Review: Calculating Total Population Change

Total Population Change = (Births – Deaths) + (Immigration – Emigration)

Don't worry if this seems tricky at first! Just remember that population growth is a simple balance: are more people being born/moving in than people dying/moving out?

2. Reasons for Different Rates of Population Growth (5.3.2)

Population growth rates vary hugely between Developed Countries (MDCs) and Developing Countries (LDCs). This variation is determined by factors affecting Birth Rates, Death Rates, and Net Migration.

2.1 Factors Influencing High Birth Rates (Often seen in LDCs)

• Lack of Education: Lower levels of education, especially for women, often correlate with less knowledge about family planning.
• Need for Labour: In agricultural economies, children are often viewed as assets to work on farms and contribute to family income.
• Infant Mortality Rate (IMR): If IMR is high (many babies die young), parents may have more children to ensure some survive into adulthood.
• Cultural/Religious Reasons: Some cultures or religions encourage large families.
• Lack of Contraception: Limited access or affordability of contraception and family planning services.

2.2 Factors Influencing Low Birth Rates (Often seen in MDCs)

• High Cost of Raising Children: Education, housing, and general upkeep are expensive.
• Increased Female Education/Employment: Women pursue careers and delay starting families, leading to fewer children later in life.
• Availability of Contraception: Easy access to family planning.
• State Pensions: People don't rely on their children to care for them in old age because governments provide pensions.

2.3 Factors Influencing Death Rates

• Improvement in Healthcare and Sanitation: Advances in medicine, clean water, and sewage systems drastically reduce death rates, especially among infants and the elderly. (This is the single biggest factor globally for lowering DR).
• Diet and Nutrition: Better food supply and quality reduce deaths from hunger and disease.
• War, Conflict, or Natural Disasters: These factors cause temporary spikes in the Death Rate.
• Lifestyle Diseases: In MDCs, higher rates of obesity or smoking-related illnesses can slightly increase DR among older adults.

2.4 Factors Influencing Net Migration

Migration is heavily influenced by 'push' and 'pull' factors.

• 'Pull' Factors (Drawing people in – Immigration): Better job opportunities, higher wages, political stability, and superior social services (like healthcare and education).
• 'Push' Factors (Forcing people out – Emigration): War, natural disasters, unemployment, poverty, or political persecution.

3. The Concept of Optimum Population (5.3.3)

When discussing population and economics, we look for the ‘perfect’ number of people for a given economy. This is called the Optimum Population.

3.1 Defining the Optimum

Optimum Population: The population size which, when combined with the existing level of resources and technology, results in the highest output per head (highest standard of living).

Think of it like baking a cake (producing economic output): You need a certain number of bakers (the optimum population) to efficiently use the ingredients (resources) and the oven (technology).

3.2 Underpopulation

Underpopulation: Occurs when the population is too small to make efficient use of the country’s resources.
The result: Output per head is lower than it could be.

Example: A country like Canada or Australia might be considered underpopulated, having vast areas and resources but not enough labour to fully exploit them.

3.3 Overpopulation

Overpopulation: Occurs when the population is too large for the available resources and technology.
The result: Output per head is reduced because adding more people lowers efficiency and strains resources.

Example: A very densely populated country where adding more people leads to severe unemployment, traffic congestion, and pressure on food and housing supply.

4. The Effects of Changes in Population Size and Structure (5.3.3)

Changes in population size (total number) and structure (age/gender breakdown) have huge impacts on economic development, requiring government planning for services and infrastructure.

4.1 Economic Effects of an Increase in Population Size

• Benefits:
  • Increased Labour Supply, which can help economic growth if jobs are available.
  • Increased Demand for goods and services, encouraging investment and production.
• Costs/Drawbacks:
  • Strain on Infrastructure (roads, utilities, schools, hospitals).
  • Higher Unemployment if the job market cannot absorb the extra workers.
  • Increased Poverty and homelessness if resources are scarce.
  • Environmental problems (pollution, resource depletion).

4.2 Economic Effects of a Decrease in Population Size

While a shrinking population relieves environmental pressure, it brings unique economic challenges.

• Costs/Drawbacks:
  • Reduction in the size of the Labour Force (fewer productive workers).
  • Reduced Demand for goods and services, potentially causing recessions.
  • Firms may struggle to find workers, leading to higher labour costs.

4.3 The Importance of Population Structure (Age Distribution)

Economists are often more concerned with the *structure* of the population than its total size, especially regarding the Dependency Ratio.

The population is generally split into three groups:

1. Young Dependents: People aged 0–15 (need education, healthcare).
2. Working Population (Active): People aged 16–64 (pay taxes, produce output).
3. Old Dependents: People aged 65+ (need pensions, geriatric healthcare).

The Dependency Ratio measures the ratio of dependents (young and old) to the working population. A high ratio means fewer workers are supporting more non-workers—a huge burden on the economy.

Case Study A: An Aging Population (Common in MDCs, e.g., Japan, Italy)

An increase in the proportion of Old Dependents means:

• Increased Government Spending: Higher costs for state pensions and specialized healthcare.
• Reduced Productivity: The labour force shrinks, and innovative capacity might slow down.
• Higher Taxes: The smaller working population must pay higher taxes to support the large number of retirees.
• Changing Demand Patterns: Demand shifts towards health services, retirement homes, and slower tourism.

Case Study B: A Youthful Population (Common in LDCs, e.g., Nigeria, Pakistan)

An increase in the proportion of Young Dependents means:

• High Education Costs: Governments must spend heavily on building schools and training teachers.
• Strain on Housing and Food: Rapid population growth requires massive investment in basic necessities, diverting funds from other productive sectors.
• Future Labour Supply: A benefit is a large potential future workforce, provided that sufficient jobs are created when they reach working age.

5. Interpreting Population Pyramids (5.3.3)

A Population Pyramid is a powerful tool used to illustrate the structure of a country's population by age and gender at a specific time. (Note: You are only required to interpret them, not draw them.)

5.1 What a Pyramid Tells Us

The pyramid is structured with:

1. Age Groups: Shown on the vertical axis (bottom to top).
2. Gender: Males are usually on the left, females on the right.
3. Number/Percentage of People: Shown on the horizontal axis.

5.2 Interpreting Different Shapes

The shape of the pyramid gives immediate clues about the country's development level, birth rates, and death rates.

A. Pyramid Shape (Typical of Developing/High-Growth Countries)

• Wide Base: Indicates a very high Birth Rate and a large number of young dependents.
• Narrow Top: Indicates a high Death Rate and low life expectancy.
• Consequence: High dependency ratio (young dependents). The economy needs to focus heavily on education and infrastructure.

B. Column or Rectangular Shape (Typical of Developed/Stable Countries)

• Narrow Base: Indicates a low Birth Rate (families are small).
• Wider Middle/Top: Shows that people are living longer (low Death Rate/high life expectancy).
• Consequence: Potential high dependency ratio (old dependents). The economy faces burdens related to pensions and healthcare for the elderly.