Population and Economics | The Knowledge Dynasty

Population and Economics

A group or species that live in the same geographical area is known as the population.

Population aging

In an economy,Lower birthrates and longer lives lead to a situation of “population aging” which means more elderly people and less children and youth.

Effects of population aging

In the developed countries ,the costs of retirement like pensions and health care are borne by the central government and funded through taxes on the population that is working and young.Hence, population aging burdens government with the fact that there are less taxes and more costs of retirement.
Population aging puts an intense political pressure on government to modify the implicit contract by delaying the age of retirement or reducing the size of the benefit.
In many countries,population aging is a fear which leads to the development of many policies that include promotes new births by banning abortion and offering prizes for birth.This fear has induced to motivate people to keep larger families.
Fluctuations in generation size also cause problems in an economy.Changes in generation size subsequently effects the labor market. When a small working age generation pays high taxes to support a large retired one, many of the smaller generation feel unfairly burdened.

Debate over Population

Against the population growth

The fear of “stationary state”.

Many economists argue that the growing population makes land increasingly scarce, rising food prices would cuts off further economic and population growth of a country, leading to what is known as the “stationary state.”
When a population grows more rapidly, the new members require more output in terms of housing,land and tools. The investments must increase and the domestic saving rates decrease when the new members increase.

In favour of population growth

While some economists were emphasizing these Malthusian views, two others, Ester Boserup and the late Julian Simon, argued that population growth has positive economic effects.
They pointed out that more births mean more minds to think about how to use resources efficiently in an economy.
More population also means more hands to work,stimulation of investment demand, spur  technological progress, and would lead to harder work .
These economists argued that since the ultimate resource for a country was people, the world would be better off with more of them.

This debate started getting over when in 1980’s,a reassessment revealed that many economists agreed that population growth wasn’t that harmful and posed some benefits for the economy as well.Following points supported this idea:

When population growth makes resources more scarce, the prices of those resources are bound to  rise. This leads consumers to reduce their use of these resources and to find substitutes.
The high price of resources push the consumers to look for other options and substitutes.Technology advances however lower the high price of resources.

Population growth in view of ecology

Many environmentalists sounded the population alarm opposing the economists view which started to believe that population growth was relatively harmless.

The environment provides essential inputs for economic activity and its limits could place bounds on sustainable levels of production.
The renewable resources such as air,land,water are polluted by many companies in lieu of economic activity.These companies use the natural resources without bearing the full cost of environmental degradation.The costs are passed on to society as whole.

An intense need is required to take the factors of ecology into account.The urgency for population control on ecology grounds is however obvious and needs immediate attention.

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Recorded at the Mises Circle Southwest Regional in Houston, 18 January 2014. Includes an introduction by Jeff Deist. In the modern United States, federal law…

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