The relationship between inflation and economic growth has been one of the most important issue since the beginning. By inflation, we mean a gradual increase in the level of price of goods and services over a period of time. When inflation increases, purchasing power of money decreases, cost of living also the cost of borrowing increases. All these causes the economic growth to decrease. However, if cost of borrowing decreases, this means investors will take more loans which will lead to higher investment, which also means labors will have more wages, (higher disposable income) and this in turn will increase consumption hence GDP will increase which will lead to economic growth.
While the health care system is improving, people become healthier and it helps to increase the life expectancy. What are the impacts of the aging population on the economy context? a) Labor Force Supply and Productivity There will be a decline in the supply of labor force among the young populations as the total fertility rate decreases. The involvement of older generations is a good thing as it helps to reduce the shortage of skilled workers. Although older workers tend to have more skills and abilities, the young workers would probably have something that can lead to innovation or development of the new ideas.
In the Solow model human capital is treated much the same as physical capital in that if the workers are made more productive in their labour, because they are more educated, then the level of output will increase and living standards will rise. In being treated as an equivalent of physical capital the same analysis does carry over in that the accumulation of human capital only temporarily cause growth until the point of diminishing returns. This can come into to play due to an ageing work force or emigration of top talent aka
When workers see that their wages have risen, they supply more labor, leading to a lower unemployment rate. Workers may not realize immediately that their purchasing power has fallen due to quickly rising prices, but over time, their expectations and understanding changes and they begin to supply less labor, thus resulting in the natural rate of unemployment and high inflation. Phelps illustrates this phenomenon in his expectations-augmented Phillips Curve. His contributions have better explained the relationship between unemployment
Additionally, the developed countries have higher levels of education as compared to education level of developing countries. Moreover, there are improved and better living standards in developed as compared to developing countries (Dyson & Economic and Social Research Council 2010). Research and describe a program for developing countries that would help improve 1 of the 3 conditions that you compared. To aid the developing countries improve their education level, they need to embrace the education of women. This is because high education standards will enable the members of the society to get better employment and be in a position to maintain and sustain their families (Chadwick & Pergamon Urban and Regional Advisory Committee 2013).
Issues in labor markets, no systematic benefit system and lack of government spendings in important areas are seen as the major reason for such astronomical figures of unemployement in spain. Added worker effect also works towards more trouble and recession.The statistical data shows that spain has broken unemployement records, in november 2012 spain was going at 26.6% and 55% youth unemployement which accounted for 6 million people in the population. Spain had a booming economy before 2008 crisis but the gains were not parmanent because they were not sound structurally. Spain in the later 90's till 2007 saw a period of spectacular growth, its GDP per capita hadpeaked to 90% of EU-15 average. This GOLDEN DECADE for spain resulted in continouse fall in unemployement and also the inflow of foreigners who exploited this boom in the economy.
Malthus had a pessimistic approach towards population growth. He believed higher the population higher would be the amount of resources required for them to sustain and would thus decrease a country's economy. They would require more number of homes, more jobs, more infrastructure. this can even be constructed in the long run if the population doesn’t grow at a fast pace, but in periods of rapid population growth, the population grows faster than the infrastructure available to accommodate it and hence increasing number of slums, depletion of resources etc. In such a case population growth does pose a challenge in front of economists, planners and the governing body.
There is a novel societal axiom - the more educated one becomes, the higher one’s chances of being more successful in life. For many families acquiring education for their children is believed to be the foundation of helping them advance their socio-economic status (ref 1). In the western societies where the mean age keeps increasing, due to an ageing of population, the educational sector has received diminishing financial support from the government (reference 2 about the fact that education is becoming more expensive,). This implies that universities are losing the subsidies they once received, and have to respond by raising the tuition fees. Increased tuition fees for students suggest that the opportunity cost - what one must give up in
Thus a huge looming problem for many countries is population growth. Population growth is a tremendous strain to endure and is particularly problematic in developing countries. Yet, the demographic transition model shows us that population growth is a necessary part of the transition to a more stable society. It represents the change in, not only a country’s size, but its demographic. As a country becomes healthier and more able to care for its citizens, its demographic will change from young mothers and lots of children, to more adults with higher life spans.
Demographic Dividend: The demographic dividend is the economic growth that may result from changes to a country’s age structure. Demographic dividend occurs when the proportion of working people in the total population is high because this indicates that more people have the potential to be productive and contribute to growth of the economy. India’s Demographic Dividend has been a global talking point for quite some time. While the whole world is aging, India has a significant percentage of population in the young age category. This has heightened the prospects for not just India but the entire world.