Population growth – some issues

Yesterday we looked at the economic costs of population growth following on from the discussion on non-economic costs. It could be argued that much of this analysis is theoretical, that assessing costs and benefits is problematical. Both comments would be valid. However, we can using Cornwall as a case study make some general observations.

Cornwall has seen one of the highest population increases of any area – county – in England since 1961. According to the pro-population growth adherents this should have led to a highly buoyant economy with rising earnings and output per person. But it hasn’t. Now factors other than population growth could be responsible for the lack of economic success. We would concur with that view. But what is obvious is that population growth has not provided a boost to the economy, it has not led to better earnings. Indeed it could be argued that population growth has hindered economic development. One reason for this is that by continually increasing the labour supply there is downward pressure on earnings. Employers have less incentive to increase productivity if there is a sustained inflow of workers. With a tight labour market there would be an incentive for employers to make the best use of the existing workforce and raise output and earnings.

The other effect of continual population growth is that a significant element of investment is required simply to keep up with population growth rather than improve infrastructure and facilities. Road building – these days in the form of road widening to accommodate growth in traffic is a good example. Ostensibly it looks like and is invariably promoted as something which will improve the economy. Yet without traffic growth much of the expenditure would not be needed.

What we see is expenditure which enables us to keep up rather than move forward.


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