The growth of population tends to retard the per capita income in three ways:

(i) It increases the pressure of population on land;

(ii) It leads to rise in costs of consumption goods because of the scarcity of the cooperant factors to increase their supplies; and 

(iii) It leads to a decline in the accumulation of capital because with increase in family members, expenses increase. 

These adverse effects of population growth on per capita income operate more severely if the percentage of children in the total population is high, as is actually the case in all UDCs. Children involve economic costs in the form of time and money spent in bringing them up. 

But they are also a form of investment if they work during childhood as is the case with the majority of families, and if they support parents in old age which is rare in the case of majority of children.

As these economic gains from having many children are uncertain, therefore a large number of children in the population entails a heavy burden on the economy, because these children simply consume and do not add to the national product. Another factor is the low expectancy of life in underdeveloped countries.

It means that there are more children to support and few adults to earn thereby bringing down the per capita income. Whatever increase in national income takes place that is nullified by the increase in population. Thus the effect of population growth is to lower the per capita income.

 

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