Effects of a Rising Population — Population | IGCSE Economics

Exam Frequency Analysis

Past paper frequency (2018 to 2024)

This topic accounts for approximately 8% of your exam marks.

stable

Low

Stable8%

Population structure, birth/death rates, and the economic consequences of changing population appear in Section B roughly every other paper; typically 6 to 8 marks.

A growing population has both benefits and costs. A typical "discuss" question rewards a balance of both.

Benefits

Larger workforce. More working-age adults can produce more output. Potential GDP rises.
Larger domestic market. Firms have more customers and can spread fixed costs over more units (economies of scale).
More innovation. A larger talent pool produces more entrepreneurs, scientists and skilled workers.
Higher tax base. More workers means more income tax and VAT revenue to fund public services.
Counters ageing. Faster population growth (often via immigration) reduces the dependency ratio.

Costs

Pressure on housing. Faster population growth than housing supply pushes up rents and prices.
Pressure on public services. Schools, hospitals, GP surgeries, transport must expand to keep up.
Pressure on resources. Water, energy, raw materials are all consumed faster.
Environmental damage. More pollution, more emissions, more congestion, faster depletion of natural resources.
Strain on infrastructure. Roads, rail, broadband all need extra capacity.
Possible falling output per head. If population grows faster than GDP, GDP per capita falls even though total GDP rises.

The optimum population

The optimum population is the size of population that, with the country's existing resources and technology, produces the highest output per head.

If a country is below its optimum, adding people raises output per head, because there are resources (land, capital) standing idle that the extra workers can use. If a country is above its optimum, adding more people lowers output per head, because the existing resources have to be shared among more workers. The optimum is not fixed: a rise in the capital stock, better technology or the discovery of new resources all raise the optimum population, so a number that was "too many" in one decade can be productively employed in the next.

Whether population growth is "good" or "bad"

The right answer depends on whether investment and productivity keep pace with the rising population, and on whether the country is below or above its optimum.

If a country adds 1% to its population each year and invests enough to keep the capital stock, housing, infrastructure and public services growing at the same rate, the rising population is broadly positive. Output per head can hold steady or rise.
If the population grows faster than investment, output per head falls: the new workers do not have the tools, capital or infrastructure they need to be productive.

This is the Malthusian concern: that population growth tends to outpace the resources needed to support it, dragging down living standards. The modern view is more nuanced: with enough investment in technology, education and capital, population growth need not impoverish a country, but it does require active policy.

Exam tip

Discuss whether a growing population benefits an economy (8 marks)

What comes up: an 8-mark "Discuss whether or not a country would benefit from an increase in the size of its population." You must present both sides and reach a judgement.

Write: for the "yes" side, credit flows from: a larger labour force producing more output (1) raising tax revenue (1) which lets the government spend more on education or infrastructure (1); higher consumer expenditure boosting aggregate demand (1); economies of scale as larger markets allow lower unit costs (1); a fall in the dependency ratio if growth comes from working-age immigration (1). For the "no" side: pressure on housing, public services and infrastructure (1) requiring more government spending (1); environmental damage from congestion and pollution (1) raising external costs (1); if growth is birth-rate-led, the dependency ratio rises (1) and many of the extra population may be outside the labour force (1); GDP per capita may fall if total output does not keep pace with population (1).

Watch out: a one-sided answer cannot reach the top mark band. State a clear judgement: for example, whether the outcome is positive depends on whether the growth comes from (tends to be beneficial) or from a (costs materialise now, benefits take a generation). Bring in context (e.g. whether the country is below or above its optimum population size).