PD - The Economic Lesson (Lesson)

The Economic Lesson

3 Economic Implications

Each of the stages discussed on the previous page also impacts the economy of the region.

During Stage 1, while death rates and birth rates are high, countries experience less economic growth because adults use the resources for child-rearing. The purchases are centered on the demands or needs of the children. Additionally, because there are so many children, there are fewer resources available for each child. For example, in many countries, education is not free, if a couple has 10 children, the likelihood of all 10 being able to receive an education is low. Additionally, there is less food, medicine, and attention provided to each child.

As a region moves into Stage 2, and birth rates begin to decline. More resources are available to each child, education rates tend to climb, and those children compose a larger group that works, saves, and contributes to economic growth. Additionally, each of those children, who are now working adults, tend to have fewer children themselves, concentrating the resources available for each child. As long as a country generally stays in this pattern, where each couple has two children to replace themselves, then population rates will remain steady and there will be enough younger people to support the older people.

However, if birth rates decline, as is happening in many developed countries who are in Stage 3, there will be a large "retired" or senior population dependent on a much smaller younger generation. This older population will consume more than they produce as many no longer work, incur increased costs due to health care, and live longer than previous generations. For countries in the third stage, this "old-age dependency" is a controversial issue.

Below is a population pyramid for the United States from populationpyramid.net. Notice the "baby boom" generation. There is a serious concern in the US that as this larger population of people continue to age, retire, and draw on social security and medicare, the younger, smaller generation supporting them will not be able to keep up financially.

 

 

 

RESOURCES IN THIS MODULE ARE OPEN EDUCATIONAL RESOURCES (OER) OR CREATED BY GAVS UNLESS OTHERWISE NOTED. SOME IMAGES USED UNDER SUBSCRIPTION.