Population: growth, structure and its effects

Last time

Before we start: last time, in Living standards and differences in economic development, you learned these points. Here they are again on one card. Keep them in mind, because today builds on them.

Why population matters

Pakistan's population is young and growing fast; Japan's is old and shrinking. Both cause problems, of very different kinds. In this lesson: what makes a population grow, how its structure changes, and what that means for an economy.

What changes a population

Population changes through births, deaths and migration. Natural increase is the birth rate minus the death rate. Net migration is immigration minus emigration. If the birth rate is 30 per thousand and the death rate is 8 per thousand, the natural increase is 22 per thousand a year.

Rates per thousand

A birth rate is the number of births per thousand people in a year, not a percentage. In one question, a population of 1.2 million had a birth rate of 10.2. Births equal 1.2 million times 10.2, divided by 1,000, which is 12,240. The examiner said fewer than half got this right, because they treated 10.2 as a percentage.

Why birth rates are high

Children may work on family farms and support parents in old age, so families want more of them. High infant mortality means families have more children in case some die. And there may be little access to family planning. Cultural traditions, early marriage, and low female education also raise birth rates.

Why death rates fall

Better health care and vaccinations prevent many deaths, especially of children. Clean water, sanitation and better nutrition reduce disease. When death rates fall faster than birth rates, population grows rapidly. That is the stage many developing countries are in.

Population structure

Population structure is the mix of people by age and gender, shown on a population pyramid. A wide base means many young people: high birth rates. A wide top means many old people: long life expectancy. The dependency ratio compares dependants, the young and the old, with the working-age population that supports them.

A young, growing population

More schools, health care and housing are needed, which costs the government money. But in future there will be a large labour force, and a large market for firms. If jobs do not grow as fast as the labour force, unemployment rises.

An ageing population

More pensions and health care are needed, while the working-age population that pays taxes shrinks. Firms may struggle to find workers. Demand shifts towards products for older people, such as health services. Older workers bring experience and reliability, and some firms value them for that.

Optimum population

The optimum population is the size at which output per head is highest, given the country's resources. Over-population means too many people for the resources, so output per head falls. Under-population means too few workers to use the resources fully.

Migration

Immigration can fill labour shortages and bring skills. But it can raise demand for housing and services. Emigration of skilled workers, the brain drain, loses their skills. But they often send money home to their families. Pakistan gains a great deal from money sent home by workers abroad.

Does a city gain from more people?

It may: a bigger market for firms, more workers, more tax revenue, and economies of scale in services. It may not: congestion, housing shortages, pollution and pressure on water, schools and hospitals. It depends on whether jobs, housing and services grow as fast as the population.

Mistakes that lose marks

Mistake one: treating a birth rate per thousand as a percentage. Mistake two: saying population growth is always bad. It can bring workers and markets. Mistake three: describing an ageing population without saying its effect on the economy. The fix: per thousand, both sides, and the economic effect.

The full-marks tip

The full-marks tip: calculate rates per thousand: population times rate, divided by 1,000. For any population change, give an effect on workers, on government spending, and on firms.

On one card

So, on one card: population. Keep it for revision.