Population and Employment - Business Studies Form 3 Notes

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  • Population refers to the number of people living in a particular region at a particular time.

Basic Concepts in Population

1. Population Growth Rate

  • Rate at which the size of a population changes over a given period of time usually one year.

Factors Associated With Growth Rate

  • Mortality rate-the rate of death in every 1000 people.
  • Birth rate-the number of live births in a year per 1000 people.
  • Migration –population movement from one region to another.it can either be:
  • Immigration-migration into an area.
  • Emigration-migration out of an area.

Factors Leading To High Birth Rate

  • Cultural practices like believing that many children act as a source of security.
  • Early marriages prolonging the woman reproductive life.
  • Children being seen as a source of cheap labour.
  • Many births as a family searches for a male child.
  • Religious beliefs which encourage large families.
  • Ignorance leading to opposition of family planning.

Factors that leads to decline in birth rates

  • Delayed marriages due to such things as staying in school for too long.
  • Craving for a higher standard of living leading to people having few children.
  • Desire to give children better lives than the parents.
  • Where a small family is considered fashionable.
  • Due to reduced infant mortality rates, most people have confident that all the children will survive hence no need of having many children.
  • Availability of viable retirement benefits schemes which made people to stop viewing children as a source of security in old age.

2. Optimum Population

  • The population level which is equal to the availability resources.

What optimum population depicts

  • It is the population that can generate the highest living standards at the available resources and the state of technology.
  • It is the population size that can lead to the most efficient use of resources while maximizing output per capita.
  • Population below optimum level implies that resources are under-utilized and standards of living are low.
  • An increase in population beyond optimum population level leads to overutilization of resources and hence standard of living.

3. Under Population

  • This is a situation where available resources in a country are greater than the size of population in the country.

Factors Leading To Under Population

  1. An increase in Death Rate
    - Natural Catastrophes such as earthquakes, flood etc. will lead to an increase in death rate therefore the country witnesses a reduction of population
  2. A fall in Birth Rate:
    - When a country decides to reduce the number of children for fear of eventual overpopulation or any socio-political factor which does not favor children, the country becomes under populated
  3. High Level of Emigration
    - A persistent increase in emigration over immigration will leads to a reduction in a country
  4. Low birth rates
    -If the birth rate is low, the total population may remain small to the extent that it does not get to the optimum.

Positive Effects of Under Population

  1. No Congestion:
    - A country with less population experiences little or no congestion
  2. Employment Opportunities:
    - As a result of small size of the population, there will be enough job opportunity for the people
  3. Increased in Social and Infrastructural Facilities:
    - An under Populated Country experiences a higher per capita in terms of social and infrastructural facilities available to the people in the country.
  4. Availability of Idle Resources:
    - The fact that a country is less populated means that the resource available in that country is higher than the number of people; hence, many idle resources would abound everywhere.



Negative Effects of Under Population

  1. Lower Standard of Living:
    - Under Population engender lower standard of living as a result of inadequate labor force that would have conveniently boost output and production of goods and services.
  2. Lack of Adequate Manpower:
    - Under population results to shortage of labor with that attendant effect of low investments and income
  3. Underutilization of Resources:
    - Resources are highly underutilized in a country with low population
  4. Lack of People to Defend the Country:
    - At times of war and emergency, a country might find it difficult to mobilize enough people to defend it.
  5. Equilibrium at Less than Full Employment:
    - Under population leads to reaching of equilibrium at less than full employment as a result of idle resources.

4. Over Population

  • Occurs when a country‟s population is large compared to its resources such that the resources are overstretched.

Advantages Of Over Population

  1. Widening Market
    - Large population provides a wide market for goods and services.
  2. Better utilization of resources
    - Large population creates increased demand for goods and services and in an attempt to meet the increased demand, there is better utilization of the available resources.
  3. Creates a pool of labour
    - A pool of labour force is created where producers can satisfy their labour force needs.
  4.  Stimulates investments
    Due to large population, entrepreneurs may expand their business to meet the growing demand for goods and services due to over population while at the same time new investments are made.
  5. Promotes labour mobility
    - Overpopulation increases labour mobility as jobless people tend to move from one area to another in search of employment.

Disadvantages Of Overpopulation

  1. Strain on the available social amenities
    - Excess demand of the available social amenities such school and health facilities may put pressure on the them resulting to poor services delivery.
  2. Low standard of living
    - As the population increases while income remain constant, the income per head reduces.
    - Reduced income reduces individual‟s ability to acquire basic needs such as food and health care.
  3. Encourages rural to urban migration
    - Many people move from rural to urban areas where they think they can get employment. As a result the urban areas get more people than the available jobs.
  4. High dependency level
    - In overpopulation areas, there are many people who are not employed. Such people tend to depend on the employed ones for their upkeep and this may strain those who are employed
  5. Imbalance in demand and supply
    - Overpopulation creates excess demand in population to the supply of goods and services, where the supply of goods and services is not able to keep pace with the increase in demand for them, prices may keep on increasing.
  6. Food shortage
    - Overpopulation may result in shortage of foods due to increased population in which the amount of food is not enough to feed the whole population.
  7. Increased crime rates
    - When many people are unemployed because of overpopulation it may make it hard to acquire even the basic necessities and they may engaged in crimes such as stealing to survive.
  8. Environmental degradation
    - Overpopulation may cause over exploitation of natural resources leading to environmental degradation.

5. Young Population

  • This a population where there are more young people than old people.

Causes of Young Population

  • High birth rate and low infant mortality rate.
  • Low life expectancy.
  • High mortality rate be among aging adult.

Problems Associated with Young Population

  1. High dependency ratio
    - There is high dependency ratio on working population as it may be forced to cater for a large number of young population who are unemployment.
  2. High rate of unemployment
    - The demand for jobs by many young people entering the labour market is higher than the available jobs creating unemployment.
  3. Increased social evils/crimes
    - Young population may have a large number of youth idle. They may engage in cries in order to survive.
  4. Low labour supply
    - Young population may experience low labour supply as many of the youths may have not attained the working age
  5. Pressure on goods and services
    - Increased demand for goods and services required by the youths may put pressure on them as the demand overtake supply.
  6. Reduced savings and investments
    - Due to high rate of consumptions by the young people savings is reduced and in turn results in low investments.
  7. Diversion of government expenditure
    - The government may be forced to divert its expenditure from other needy sectors as it caters for the welfare of the youth.

6. Ageing Population

  • This is a population with higher proportion of older people. These people are above 65 years old.


Problems Associated With Ageing Population

  • Old people tend to provide a less mobile labour force.
  • Low labour supply is likely as old people tend to be less productive.
  • High dependence of old people on working populations.
  • Society becomes less progressive as it lacks the input of the energetic youth.
  • May led to unemployment due to fall in demand for goods and services required by the youth.

7. Declining Population

  • This is a population that has been reducing over time.

Effects Of Declining Population

  1. Reduces government expenditure
    - The government may spend less in provision of resources such as infrastructure and social services making them to improve on the quality of their services to the citizens.
  2. Attainment of optimum population
    - Declining population may enable a country that has been overpopulated to attain optimum population.
  3. Proper utilization of land and other resources
    - For a country that is overpopulated, declining population may reduce pressure created on land and other resources and this may lead to improved productivity while declining population may lead to underutilization land and other resources.
  4. Discouraging investments
    - As the population declines, the market for goods and services also declines. This may force the existing business to close down while new investors may be scared away.
  5. Reducing dependency of the unemployed on the employed
    - For over populated country, decline in population may reduce the dependency of the unemployed because they will now get employment due to reduced population.
  6. Population structure
    - This is the composition of population according to age, sex, income distribution and levels of literacy. Below is a hypothetical population structure of a country that assumes equal number of male and female.

Implication of Population Size and Structure on Development

  • The population structure may have both negative and positive implications.

Positive Implications

  1. Increase in market demand
    - When population increases a wide market for goods and services is created depending on the structure of the population.
  2. Enough labour supply
    - Rapid population growth leads to increased labour supply which would in turn lead to payment of low wages.
  3. Technological advancement
    - Competition and pressure of resources may lead to increased labour supply which would lead to higher efficiency and also insipire people to look for new methods of improving productivity.
  4. Diverse talents
    - In a rapid growing population the number of talents are likely to be many.

Negative Implications of a Rapid Population Growth.

  1. Decrease in per capita income
    - When the growing population depends on a fixed factor of production, output may increase up to a certain point and beyond this point, output per head which also determines per capita income declines.
  2. Increased dependency ratio
    - In a rapid growing population most the people depend on the available work force for survival.
  3. Reduction in savings and investments
    - In a large population most of the earnings is spend leaving nothing or very little to save.
    - This will in turn lead to low investment.
  4.  Unemployment
    - The number of people in the labour force exceeds the number of jobs available leading to unemployment.
  5. Strain on social amenities
    - Due to overpopulation, the government may find it difficult to provide adequate essential social services such as health, education and housing.
  6. Uneven distribution of income
    - In over populated countries there are very few rich people and very many poor people leading to unequal distribution of income.
  7. Environmental degradation
    - Over population usually leads to over exploitation of the natural resources leading to environmental degradation

Employment and Unemployment.


  • The term refers to engagement in any type of income generating activity.


  • The term refers to inability of people who are capable and willing to work to get meaningful employment opportunities

Types of Unemployment

  1. Cyclical unemployment – occurs due to relatively low general demand for goods and services.
  2. Structural unemployment – caused by changes in production methods, change in technology and changes in demand for goods and services.
  3. Frictional unemployment – occurs when people are unable to secure jobs due to barriers which hinder them from getting jobs such as ignorance. Or when people lose jobs and go looking for new ones
  4. Seasonal unemployment – occurs due to relatively low demand for labour at certain times of the year.
  5. Involuntary unemployment/open unemployment - results from lack of jobs. For example people willing to work at the prevailing wages but work is not available
  6. Real wage/Voluntary unemployment – occurs when job seekers are not willing take up jobs at the prevailing wage rates
  7. Disguised/Hidden unemployment – Occurs when the number of people employed exceeds the number which is required for the job.
  8. Residual unemployment – Affects people who are physically & mentally challenged.
  9. Erratic /Casual unemployment - Affects certain sectors of the economy like construction where demands for labour is erratic and not regular.

Causes Of Unemployment

  1. Poor education system
    - The education structure used in developing countries is not beneficial to the students as it does not directly correspond to the prevailing economic activities outside the school system. Rather than providing useful skills to students and molding professionals, theory is what is being taught instead of practical. This mismatch between the school levers and jobs requirements creates unemployment‟
  2. Bad leadership
    - Lack of employment in developing countries is also linked to the bad leadership and corrupt attitude of individuals in power. Moreover, there is a lot of money embezzlement and power retention exhibited by policy makers in the education sector in Africa. This means funds required for improvement of education are diverted for selfish personal use. Hence, the education sector remains largely undeveloped.
  3. Rural to urban migration
    - When people move from rural areas to urban areas in search of employment, they put tremendous pressure on the available resource and expanding work force that cannot be absorbed.
  4. Rapid population growth
    - If the population is growing at a faster rate than the economy is expanding, it leads to more workforce entering a labour market which causes unemployment.
  5. Lack of product market
    - If the demand for goods and services is less due to low income producers will be discouraged to produce more leading to unemployment.
  6. Seasonality in production
    - Seasonal variations cause unemployment such that during the peak season, employment is high and during off peak seasons employment is low.
  7. Use of inappropriate technology
    - If a country uses labour intensive methods of production it will limit the growth of employment opportunities.

Methods To Solve Unemployment

  1. Population control
    - Advocating for reduction in the population growth rates in the country through various ways such as family planning.
  2. Adaption of appropriate education systems
    - Introducing the appropriate forms of education and training people for the jobs that are available.
  3. Use of labour intensive methods
    - Use of labour intensive techniques in government institutions and projects.
  4. Proper planning
    - By proper planning and management of natural resources and fighting corruption so that resources can be used well to create jobs.
  5. Entrepreneur culture
    - Through encouraging the entrepreneurship culture in the country by providing a conducive environment for investment.
  6. Delocalization of firms/Rural development
    - Delocalization of firms by the government to create jobs in rural areas hence reducing rural to urban migration of people in search of employment.
  7. Encouraging direct foreign investments.
    - Encouraging foreign investment enough various policies such as tax holidays and enabling repatriation of profits from the businesses of foreigners.
  8. Increase government spending or expenditure.
    - Expenditure on infrastructure such as roads railways and electricity supply creates jobs and releases money in circulation creating demand for goods and services.
  9. Encouraging the use of local resources
    - Government can increase its expenditure on projects that will create more jobs opportunities.
  10. Encouraging the use of local resources
    - Government can encourage investment on economic activities that use locally available raw materials or inputs which will intern create more jobs opportunities.
  11. Encouraging the use of local resources
    - Government can encourage investment on economic activities that use locally available raw materials or inputs which will in turn create employment for those involved in provision.

Past KCSE Questions On The Topic

  1. Explain the following terms as used in business
    1. Census
    2. Unemployment
    3. Mortality...
    4. Optimum population.
  2. Highlight four negative implications of a rapid population growth in developing countries
  3. State five causes of unemployment in Kenya
  4. Highlight four challenges passed to a country by a rapidly growing population
  5. The table below shows a change in population size in country X for a period of four years
     Year  Total Population (000 000)
     2001  40
     2002  26
     2003  13
     2004  9
  6. Give four reasons to account for this trend
  7. Give four advantages of high population growth rate
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