Question:

Would a 10 percent increase in the general population increase or decrease unemployment?

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Assuming all other economic factors held constant.

When you first read this question it may seem obvious that an increase in people means more competition for jobs thus more unemployement, but remember an increase in population means increases in demand for products and services, also the 10 percent increase in population doesn't equate to a 10 percent increase in the workforce since not all people of are working age.

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  1. If there  was no corresponding increase in capital investment, productivity would fall. Average wages would therefore fall  but there could still be jobs for everyone  who wants to work,

    Actually it would mean a 10% increases in the workforce because not all the of  either group of people (new or old) are of working age.


  2. Economic factors never remain constant.

    No, increasing or reducing population will not of itself increase or decrease unemployment.

    In a short term, an increase in population does drive up employment as it drives up demand for goods more than it increases supply. But, over half a generation the increased production will overtake increased demand.

    Unemployment continues to be driven by changes in production methods and changes in trading patterns (Trading patterns tend to shift employment from one area to another, so some areas will see increased employment shile others will see decline.)

    Moving a group of people who are producing for our market, from outside our border to inside our border does not have as much significant impact on unemployment  as moving a factory to where they are.

  3. You've answered your own question by dear Watson. When you caveat with "...economic factors held constant." things would remain status quo.

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