Population growth affects a society in two OBVIOUS ways:
1.) The size of the labor force – the larger the population, the more workers the society has available to produce goods and services
2.) Consumers- a bigger population means that more people can purchase the goods and services produced
Beyond those effects, population growth interacts with other factors of production, causing less obvious and more debatable outcomes.
Stretching Natural Resources:
Thomas Robert Malthus (1766-1834), an English minister and early economist, developed a book called An Essay on the Principles of Population as It Affects the Future Improvements of Society. In it, he described a hypothesis of a growing population straining society’s ability to sustain. He hypothesized that humanity was doomed to perpetual poverty. His logic was simple; Food, a necessary component of life, would eventually run out because of such massive population growth. He argued that the government should not help the impoverished because it was counter-productive, only allowing the poor to further procreate and wear down already decreasing resources. Malthus, however, was wrong. The world population has increased more than sixfold in the past two centuries while living standards around the world, on average, are much higher. Because of economic growth, extreme poverty and malnutrition are less prevalent now than in Malthus’s day. Malthus did not take into account the technological improvements that would help to offset the effects of a larger population. Today, farm technology (pesticides, fertilizers, mechanized equipment, etc.) allows farmers to produce more with less.
Diluting the Capital Stock:
Some modern theories of economic growth emphasize the effects of population on capital accumulation. (Remember: capital is the equipment and buildings used to produce goods and services) According to theories, high population growth reduces GDP per worker. Accelerated growth in the number of workers forces each worker to have less capital. A smaller quantity of capital per worker causes lower productivity which leads to lower GDP per worker. The biggest evidence for these theories is in the case of human capital. Countries with high population growth have large numbers of school-age children, which causes significant strains on the educational system. Therefore, literacy rates are low in countries with high population growth.
In developed nations, such as the Untied States and the UK, the population growth rate is quite small, rising only about 1% per year. In contrast, many countries in Africa grow at about 3% per year. This rapid growth cripples countries’ ability to provide the equipment and skills needed to achieve substantial levels of productivity.
Promoting Technological Progress:
Some economists believe that world population growth has been a catalyst for innovation and economic wealth. The reasoning: If there are more people, then there are more scientists, inventors, and engineers to contribute to technological advance. Their contributions benefit all of society.
SOURCE: Principles of Economics: Mankiw. [S.l.]: Academic Internet Publ., 2007. Print.