The effect of population growth on the economy - Politics Forum.org | PoFo

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Some of you have been asking what happens if population goes up. Doesn't that create more jobs?

The answer is a little bit more complicated. There will be more people, but each person will have less money.

The quality of demand has changed. And since the quality of this demand has changed, this new type of demand can be harder to meet.

Think about it. More services demanded (in volume) but less money available to be paid per service.
From a private business perspective, one might say revenue has increased a little bit, but profit margins are down.

When the quality of demand shifts in an economy like this, generally there becomes less economic activity. It simply isn't worth it anymore.

There are more customers, and more services they are wanting, but each customer has less money to spend. For a larger share of those potential customers, it simply won't be worth doing business with them.
What they will pay will barely cover the business costs, and the profit margin to the business will be too small. The business will have to do a lot of work for only a little bit of money.
This carries over onto the workers in that business as well. They are going to be expected to do more work, with less money paid for each time unit of work.

Even in the case of overall economic growth, directly caused by population increase, living standards can still go down.
The increase in overall economic growth is not in proportion to the population increase.


Is the amount of "wealth" limited in an economy? That is not what is being claimed here. Over time with gradual population increase, it is possible for the economy to grow with the increase in population, and for overall living standards to even increase.
But when population growth exceeds economic growth, it can start creating a relative "oversupply" of workers, tipping the balance between labor and capital.
That is probably one of the major causes of increasing inequality (although many on the Left and some Conservatives don't want to see this).


And this is what a Third World country typically looks like. Plenty of work available, but most all of that work pays very low poverty wages.
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