IGCSE Economics 0455 – Economic Development: Population
Economic Development – Population
Learning Objective
Understand the effects of:
Increases and decreases in total population size
Changes in the age distribution of a population
Changes in the gender distribution of a population
1. Population Size
1.1 Effects of a Growing Population
Labour Supply : More workers can increase potential output, shifting the production possibility frontier (PPF) outward.
Demand for Goods & Services : Higher consumption demand can stimulate business growth and attract investment.
Pressure on Resources : Greater demand for housing, water, food and energy may lead to shortages or higher prices.
Infrastructure Strain : Transport, health and education services may become overstretched, reducing quality.
Unemployment Risk : If job creation does not keep pace, unemployment and under‑employment can rise.
1.2 Effects of a Declining Population
Reduced Labour Force : Potential contraction of output and slower economic growth.
Lower Domestic Demand : Decreased consumption can lead to excess capacity and lower profits.
Pressure on Public Finances : Fewer taxpayers may limit government revenue, affecting public services.
Opportunities for Automation : Firms may invest in labour‑saving technology to offset shortages.
Potential for Higher Wages : Scarcity of workers can push wages up, improving living standards for those employed.
Suggested diagram: PPF shift illustrating the impact of population growth versus decline.
2. Age Distribution
2.1 Young Population (High Dependency Ratio)
Large proportion of children and adolescents.
High demand for education, child health services and future job creation.
Short‑term fiscal pressure on government budgets.
Potential “demographic dividend” if the economy can absorb the growing labour force when they enter work age.
2.2 Ageing Population (High Elderly Dependency)
Increasing proportion of people aged 65+.
Greater demand for pensions, healthcare and aged‑care services.
Potential labour shortages, especially in physically demanding sectors.
Higher savings rates may increase capital available for investment, but consumption may fall.
Suggested diagram: Population pyramid showing a youthful vs. ageing structure.
3. Gender Distribution
3.1 Balanced Gender Ratio
Equal participation of men and women in the labour market can maximise human capital.
Potential for higher household incomes and improved standards of living.
3.2 Skewed Gender Ratio
Male‑biased ratio (e.g., due to cultural preferences, migration):
Possible labour surplus in traditionally male‑dominated sectors.
Social issues such as increased competition for partners, potential rise in crime.
Female‑biased ratio (e.g., due to male out‑migration):
Women may take on a larger share of both paid and unpaid work.
Potential empowerment through increased labour force participation.
Risk of “feminisation” of low‑skill jobs and wage suppression.
4. Summary Table of Impacts
Change
Economic Effect
Social Effect
Policy Implications
Population increase
Higher labour supply, potential output growth
Greater demand for housing, education, health
Invest in infrastructure, expand job creation programmes
Population decrease
Possible output contraction, upward pressure on wages
Reduced consumer demand, ageing workforce
Promote immigration, encourage higher fertility, support automation
Younger age structure
Future labour boost, higher savings potential later
High youth dependency, need for schools
Invest in education, vocational training, create entry‑level jobs
Older age structure
Higher savings, lower consumption
Increased pension and health costs
Reform pensions, promote later retirement, improve health care efficiency
Male‑biased gender ratio
Potential labour surplus in male‑dominated sectors
Social tension, possible rise in crime
Gender‑sensitive policies, promote female education and employment
Female‑biased gender ratio
Greater female labour participation
Shift in household dynamics, empowerment
Support childcare, enforce equal pay, protect against exploitation
5. Key Economic Formulas
Dependency Ratio (DR) is a useful measure of the pressure on the productive population:
\$\text{DR} = \frac{\text{Population aged 0–14} + \text{Population aged 65+}}{\text{Population aged 15–64}} \times 100\$
A higher DR indicates a larger proportion of dependents relative to the working‑age population, influencing fiscal policy and economic growth prospects.
6. Revision Questions
Explain how a rapid increase in population can both stimulate and hinder economic development.
Discuss two policy measures a government could adopt to mitigate the challenges of an ageing population.
Analyse the likely economic impact of a country where the male‑to‑female ratio is 1.3:1.
Calculate the dependency ratio for a country with the following population data:
0‑14 years: 30 million
15‑64 years: 50 million
65+ years: 10 million
Answers should reference the concepts discussed above and consider both short‑term and long‑term effects.