6.1.1. Dependency Ratio

The dependency ratio is a measure comparing the portion of a population which is composed of dependents (i.e., elderly people who are too old to work, and children who are too young to work) with the portion that is in the working age group, generally defined as 15 to 59 years. The dependency ratio is equal to the population below 15 or above 60, divided by population in the 15-59 age group; the ratio is usually expressed as a percentage.

A rising dependency ratio is a cause for worry in countries that are facing an aging population, since it becomes difficult for a relatively smaller proportion of working-age people to carry the burden of providing for a relatively larger proportion of dependents. On the other hand, a falling dependency ratio can be a source of economic growth and prosperity due to the larger proportion of workers relative to non-workers. This is sometimes referred to as the ‘demographic dividend’, or benefit flowing from the changing age structure. However, this benefit is temporary because the larger pool of working age people will eventually turn into non-working old people.