Economic activity is the production and distribution of goods and services in an economy. Economic activity is linked to employment because it is a way of earning a living. Different people in different countries in the world depend on different economic activities to acquire income so that they can satisfy their needs. Demography is a branch of sociology that examines the characteristics of human populations. Demographic studies involve the size, growth, distribution and the density of the population in a given region or country. Demographers are interested in getting the records of the total number of people living in a particular area. There is a relationship between demographic changes and economic activities. Demographic changes affect the economic activities by affecting the aggregate demand, employment, wages and income distribution.
The anticipated global demographic changes include the growth in population and increased population densities in cities. The management can learn of the anticipated demographic changes through statistical population surveys and data from various institutions (Maurice & Thomas, 2008, p. 253). It is anticipated that the world population will grow and the number of people living in cities will increase. The increase in the size of the population increases the number of potential employees in organization. According to Weber (2010, p. 116), unemployment is one of the economic indicators that affects economic growth. The increase in the population means that there should be an equal increase in the number of jobs opportunities for the population in order to reduce unemployment. In the short term, the level of unemployment will increase with positive demographic changes. However, in the long run, the level of unemployment will decline due to an increase in the number of employment opportunities.
According to Weber (2010, p. 30), an increase in the population will lead to increased aggregate demand. The high numbers of potential employees will have a negative impact on wages. However, in the long run, the low unemployment levels will indicate high wages for employees and the disposable income. The increased income in the population will result in increased aggregate demand that pushes the demand curve outwards. Manufacturers will react positively to the high demand by manufacturing and supplying more in the market. The outcome is a new supply curve that results from increased supply. However, the management can estimate the growth in demand using linear demand functions. Additionally, the elasticity obtained from the estimated demand functions can reveal whether the product will be on high demand or not (Maurice & Thomas, 2008, p. 255).
Weber (2010, p. 39), notes that positive demographic changes can also affect positively other economic indicators such as health, income levels and working wage. The overall effect on the economy is positive. The population growth will be accompanied by growth in infrastructure and production hence economic growth. The increase in population accompanied by unemployment will lead to immigration of skilled employees. Skilled employees will in turn affect production and GDP positively. Management of firms should be aware of the anticipated demographic changes and their impact on the firm. Due to increased aggregate demand, the management should consider having excess capacity and space for expansion in addition to addition management skills of a large labor force (Maurice & Thomas, 2008).
It is imperative that demographic changes will affect positively the economy of the world. The anticipated demographic changes can lead to high employment levels in the long run with the development of other supporting infrastructures and economic institutions. Increased productivity resulting from increased aggregate demand will lead to increased wage rate and employment. The overall outcome is a positive economic growth in terms of GDP. Additionally, other economic indicators in the economy will also be positive. Therefore, the management of organizations will be forced to make decisions that relate to anticipated demographic changes.
References
Maurice, S. & Thomas, C. (2008). Managerial Economics. New York: McGraw-Hill.
Weber, L. (2010). Demographic changes and economic Growth: Simulations on Growth Models. New York, NY: Springer.