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Unlock This CourseIs a bigger population always better? Not always. A country needs enough people to work, but not so many that its land, jobs and services are stretched too thin. Economists call the best balance the optimum population.
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Think of a small workshop with 5 machines. One worker cannot run them all. Five workers can. Thirty workers get in each other's way and each produces less. The best number is the optimum.
The optimum is not fixed. New machines, better skills or the discovery of new resources can raise it, because the same number of people can then produce more. A country that is over-populated today may become closer to its optimum later.
When births and net migration push the population up, or deaths and emigration pull it down, different groups feel the effects in different ways.
Workers: a bigger labour force, so more competition for jobs. Wages may be pushed down if there are not enough jobs.
Firms: more workers to hire and more customers, so demand and sales can rise.
Government: more tax revenue, but more spending needed on schools, hospitals and housing.
Economy: total output can grow. If the country is over-populated, output per head may fall and pressure on resources and the environment grows.
Workers: a smaller labour force, so jobs are easier to find and wages may rise.
Firms: fewer workers to hire and fewer customers, so sales may fall and some firms may close.
Government: less tax revenue and less spending needed on some services, such as schools.
Economy: total output may fall. If the country was over-populated, output per head could rise because there is less pressure on resources.
The age distribution is how a population is spread across age groups. Two things matter: how many people are old, and how many are young.
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Workers: fewer young workers, so labour shortages and higher wages, and older people may work for longer.
Firms: shrinking labour force, but more demand for goods and services for older people, such as healthcare.
Government: higher spending on pensions and healthcare and fewer taxpayers to pay for them, so taxes may need to rise.
Economy: slower growth is possible if the labour force shrinks.
Workers: a growing labour force in future, but young people may struggle to find jobs.
Firms: plenty of future workers and more demand for goods for children and young people.
Government: high spending on schools and child healthcare, while few people are yet paying tax.
Economy: growth is possible if the young are educated and find work, because dependency falls as they join the workforce.
In Merovia, for every 100 people of working age there are 80 dependants, mostly children. Twenty years later, for every 100 people of working age there are 50 dependants, as the children have grown up and found work. Each worker now supports fewer dependants, so dependency has fallen. More workers paying tax means the government can afford more per person on services. The opposite happens in an ageing country, where the number of dependants per worker rises.
The gender distribution is the balance between males and females in the population. An imbalance can affect the economy:
The gender distribution can also change when migration is mainly of one gender, for example when many men move abroad to work.
A population pyramid is a chart that shows the age and gender distribution. Age groups go up the vertical axis, from youngest at the bottom to oldest at the top. Males are shown as bars on one side and females on the other. The wider the bar, the more people are in that group.
A wide base that narrows quickly towards the top, like a triangle. There are many children and few old people. This points to a high birth rate and high dependency on workers.
A narrow base and a wide top, like a column or an upside-down triangle. There are few children and many old people. This points to a low birth rate and people living longer.
When you describe a pyramid, say which age groups are widest, which are narrowest, and what that means for dependency, workers and government spending.
Sundara is a country where the share of people aged over 65 has risen for 30 years. Birth rates are low and people live longer. The government has said that taxes may need to rise.
(a) Define dependants. [2 marks]
(b) Explain one effect of an ageing population on the government. [3 marks]
(c) Analyse how an ageing population may affect firms in Sundara. [4 marks]
(a) Dependants are people who do not work (1), such as children and elderly people, and rely on the working-age population for support (1).
(b) The government has to spend more on pensions and healthcare for older people (1). At the same time there are fewer workers paying income tax (1), so the government may have to raise taxes or borrow more to pay for it (1).
(c) Firms may find that the labour force is getting smaller (1), so they may struggle to recruit workers and have to pay higher wages (1). This raises their costs (1). However, demand for goods and services bought by older people, such as healthcare and leisure, may rise, giving some firms more sales (1).
In part (c), the word "analyse" means follow a chain: ageing population, then smaller labour force, then higher wages, then higher costs. Link each step with "so" or "which means" to earn the marks.