Charta is on Google Play: practise on the go. Get the app
Charta

Explain how immigration, demographics and labour force participation shape how fast and how sustainably an economy grows

CFA® Level II · Economics · Economic Growth · L2.EC.2.g

The idea

Labour input grows with population, participation, net immigration and average hours. A young, growing population can deliver a demographic dividend as the working-age share rises, while ageing shrinks that share and slows growth unless participation or productivity rises. Higher participation, for example as more women enter paid work, adds to growth only temporarily, because the rate has a ceiling. Immigration can offset low fertility with prime-age workers. Combining population and participation, the labour force grows at g = (1 + working-age population growth) × (new participation rate ÷ old rate) − 1. More workers raise total GDP but not necessarily GDP per person. The trap is treating a one-off rise in participation as a permanent lift to growth.

In the app: 2 practice questions on this outcome, a narrated walkthrough with diagrams, spaced review that brings it back before you forget it.

Take the free diagnostic →

More in Economic Growth