Demographic Distribution can affect Social Welfare?

Demographic Distribution can affect Social Welfare?

Demographic Distribution

Demographic distribution is the spatial pattern of the dispersal of populations into several agglomerations according to various factors. Several factors can affect the demographic distribution and project the spatial distribution and the model of growth.

Demography comes from two Greek words, “Demos” (δῆμoς) which means people, and “Graphos” (γράφειν) stating- to write. Demography is the scientific study of the human population primarily concerning size, structure, and development.

The factors affecting demographic distribution sorted into four division, namely

  • Physical factor 
  • socio-economic factor
  • demographic factor
  • political factor

Physical factor 

The physical factors include climate, land forms, topography, soil, energy and mineral resources, geographical accessibility from the coast, natural harbors, navigable rivers or canals, etc.

Socio-economic factor

Socio-economic factors include cultural characteristics, economic activities, the technology used (including the type of farming), and social organization.

Demographic factors

Demographic factors include changes resulting from natural increases and migration.

Political factors

Political factors such as political boundaries, political stability (or unrest), disturbances, controls on migration and trade, government policies, and transportation facilities also determine demographic dispersion.

Although models with static populations are relevant for research, in reality, the population is continually changing both in terms of structure and composition. It does affect our economy, government policy, business strategy, and living conditions.


The model studies the relationship between economic development and population growth. This theory tells us that the population in any region moves from high birth and death rate to a lower rate. It happens as society progresses from a rural agrarian structure to an urban industrialized and literate society.

There are four stages of demographic transition, they are:

  • high birth and high death rate
  • high birth and low death rate- Population explosion
  • declining birth rate and low death rate
  • low birth rate and low death rate
  • declining population
Demographic tranition

Image source: Created by Ms. Anwesha Podder

High birth and death rate

The main character of this stage is the high population rate. People in this stage mostly live in a rural area, and their main occupation is agriculture. The Standard of living is low, and the death rate is very high because of ill medical facilities, famines, and epidemics. The notable features are:

  • Stable population
  • High birth rate, High infant mortality, and High death rate = low life expectancy
  • Many young people, very few older people
  • High fertility rate (8+)

The high birth rate prevails to compensate for the significant death rate caused by epidemics and fluctuating food supply. Life expectancy is low and technological advancement is minimum.

Population explosion

In this stage, the economy faces a high birth rate and low death rate. Due to the improving socio-economic condition, income begins to rise, economic activity expands. The death rate in this phase starts to decline for increased health facilities and nourishing diet. The birth rate persists high due to social backwardness and low access to contraceptives. Therefore the key features are:

  • A very rapid increase in population (population explosion)
  • A rapid decline in death rate but death rate remains below the birth rate
  • The fertility rate remains high
  • High birth rate
  • High rate of natural increase
  • A reduction in infant mortality
  • Many young people

The gap between significantly high birth rate and low death rate this phase experience population explosion.

Declining birth rate and death rate

The stage signifies a low death rate and a decline in population growth. The gap between birth and death rates will gradually narrow down. The prominent features of this stage are:

  • increased use of family planning.
  • Low infant mortality rate prevails, hence there will also be less need for having more children.
  • Increased employment opportunity in factories, and hence there is less need to work on the land.
  • Changes to society put more emphasis on material possession than on large families.
  • The female participation rate in the labor market increases 

Low birth rate and death rate

Stage four characterize a low birth rate as well as a low death rate. The total population is growing at a slow rate. Prominent features of this phase are:

  • Birth control is widely available and, there is a desire for smaller families.
  • Both birth and death rate is low
  • The total population is still high but balanced by a low birth rate and a low death rate.

Declining population

In this stage, the population starts to decline. The birth declines( 7 per 1000) and, it falls below the death rate(9 per 1000). The population falls since it doesn’t replace itself. The population ages and, it will be left dominated by older people. Death rates may remain consistently low or increase slightly due to non-fatal lifestyle diseases like obesity, stress, and diabetes. Birth rates may drop to well below replacement level.

Demographic Distribution Theoretical Model

Let us assume a small economy with four divisions of human capital. Namely:

  1. infants and Students – S
  2. Young Adults with lower income and tax slabs – Y
  3. Adults belonging to the higher income and tax group – A
  4. Old and retired people – O

In this model, we assume that there is equality. Men and women are educated equally and earn equal wages. Thus, our demographic division is age-oriented without gender classification.

Infants and students are the future of a country. S absorbs a chunk of the Governmental revenue in the form of educational schemes and programs. Young adults earn a low income, and as per our model, they also fall under the economical or no tax slab. However, they contribute to aggregate demand and acts as a benevolent to the cycle of production and employment. Hence, even though Y cannot contribute to the governmental revenue, they maintain the balance of the economy. 

Adults belonging to the higher income and income-tax group are the best demographic assortment in any economy. They have the highest purchasing power with the best Governmental revenue source. It helps the economy to have better aggregate demand, therefore an increased velocity of money. Thus positively contributing to the production and employment cycle. 

  • Increase in aggregate demand leading to a hike in profits.
  • Thus, there arises the desire to increase the profit along with the production.
  • Which in turn increases employment opportunities.

Old and retired people have considerable savings compared to the other groups. Savings = investments. However, they are also a liability to the government. In our model, we assume they require pension schemes and programs.

The Demographic Model

L = S + Y + A + O ……………………………….. (1)

  • Let θ be the subsidy provided to each member of S.
  • α be the income of Y, and let t1 be the ad valorem tax charged.
  • β be the income of A and let t2 be the ad valorem tax charged.
  • On the other hand, let ω be the retirement aid provided to the senior citizens or group O.

θS = total education subsidy
αY = Total income of the young adults
t1αY = total tax revenue from group Y
βA = Total income of the adults
t2βA = total tax revenue from group A
ωO = total expenditure on pension and od age aid.

NI = αY (1- t1) + βA (1-t2) + θS + ωO …………………… (2)
θS + ωO = t1αY + t2βA ………………………….. (3)
subsidy = tax revenue. In other words, injection is equal to leakage.
NI = αY (1- t1) + βA (1-t2) + θS + ωO …………………….. (4)

Total differentiating equation
NI / Y = α (1- t1) > 0 ………………………………… (5)
NI / A = β (1-t2) >>> 0 ……………………………………. (6)
α << β

Model Explanation

The above equations prove that the adult group is the most beneficial demographic division for an economy. It can trigger the economic consumer-producer cycle. It can create employment opportunities, provide higher subsidies to enrich our human capital, and protect the senior people who once served the economy equally. The earning groups contribute a part of their income in the form of taxes. On the other hand, subsidies are the result of tax transfers to the non-earning groups.

For instance, if the subsidy group outweighs the earning group, the economy might need internal aid to support the functioning. On the other hand, if the earning group exceeds the subsidy group, the economy benefits. It is ideal to have a demographic division in favor of the income group rather than the subsidy group.

However, as mentioned in the demographic transitional model, it is a cycle. If the student counts are higher in period T1, the count of young adults is bound to be high in period T2. Respectively, in T3 and T4, adults and senior citizens will count the highest.

Dependent Demographic Groups

The dependent group is a liability to the earning and tax contributing people. Since our model concerns two dependent groups, namely students and senior citizens, we have researched the Governmental revenue contribution towards them.
You might question us why have we only talked about educational and pension/ old age schemes? Why does our article not take into consideration of issues such as healthcare and infrastructure? The reason being, healthcare and infrastructure are for one and all. They do not affect a single demographic division specifically.


As per the government budget, the expenditure on education is gradually declining. On February 1, the union minister Nirmala Sitharaman had presented a budget for various ministries and sectors amounting to 30,42,230 crore. This year, the government has allocated Rs 99,300 crore to education which is 3.2%.The expenditure on education as a percentage of GDP was 3.84%, 4.07%, 4.20%, 4.32% and 4.43% during 2014-15, 2015-16, 2016-17, 2017-18 and 2018-19, respectively. In 2021-22, the highest expenditure (33%) allocation was towards Samagra Shiksha (Rs 31,050 crore).

Followed by: 

  • autonomous bodies (12%) such as Kendriya Vidyalaya Sangathan (KVS), 
  • Mid-Day Meal Programme (12%), 
  • grants to central universities (8%), 
  • Indian Institutes of Technology (8%), and 
  • statutory and regulatory bodies (University Grants Commission (UGC) and All India Council for Technical Education (AICTE)) (5%), among others.

OLD AGE pension scheme

India’s public support or expenditure on old-age pensions are of two types:
(a) pension and retirement benefits to government employees and
(b) old-age pension for civilians under the Indira Gandhi National Old Age Pension Scheme (IGNOAPS).

The pension received by senior citizens under the IGNOAPS was INR 75 per month during 2006- 07 and before. It increased to INR 200 and INR 500 for the age group 60-79 years and age 80 and above respectively from 2007-08. In the current year, the government allocated 5% of its budgetary expenditure on pensions.

Ms. Shreya Roy
Ms. Shreya Roy

Ms. Roy is the Director and Founder at Ecofunomics LLP. She is an economist by profession and currently a Ph.D. research scholar at the Indian Institute of Foreign Trade She is a lover of art and a philanthropist by heart.

Anwesha Podder, Intern
Anwesha Podder, Intern

Ms. Podder is a research intern in the economics department of Eco-Fun-Omics. She is currently pursuing M.Sc. in Economics, Calcutta University.

5 thoughts on “Demographic Distribution can affect Social Welfare?

  1. I have heard great things about Shreya mam from seniors. It will be a pleasure to work as an intern under her.

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