Dependency ratio

Dependency ratio

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Encyclopedia
In economics
Economics
Economics is the social science that analyzes the production, distribution, and consumption of goods and services. The term economics comes from the Ancient Greek from + , hence "rules of the house"...

 and geography
Geography
Geography is the science that studies the lands, features, inhabitants, and phenomena of Earth. A literal translation would be "to describe or write about the Earth". The first person to use the word "geography" was Eratosthenes...

 the dependency ratio is an age-population ratio of those typically not in the labor force
Labor force
In economics, a labor force or labour force is a region's combined civilian workforce, including both the employed and unemployed.Normally, the labor force of a country consists of everyone of working age In economics, a labor force or labour force is a region's combined civilian workforce,...

 (the dependent part) and those typically in the labor force (the productive part). It is used to measure the pressure on productive population

Formula


In published international statistics, the dependent part usually includes those under the age of 15 and over the age of 64. The productive part makes up the population in between, ages 15 – 64. It is normally expressed as a percentage:


As the ratio increases there may be an increased burden on the productive part of the population to maintain the upbringing
Child
Biologically, a child is generally a human between the stages of birth and puberty. Some vernacular definitions of a child include the fetus, as being an unborn child. The legal definition of "child" generally refers to a minor, otherwise known as a person younger than the age of majority...

 and pension
Pension
In general, a pension is an arrangement to provide people with an income when they are no longer earning a regular income from employment. Pensions should not be confused with severance pay; the former is paid in regular installments, while the latter is paid in one lump sum.The terms retirement...

s of the economically dependent. This results in direct impacts on financial expenditures on things like social security
Social security
Social security is primarily a social insurance program providing social protection or protection against socially recognized conditions, including poverty, old age, disability, unemployment and others. Social security may refer to:...

, as well as many indirect consequences.

The (total) dependency ratio can be decomposed into the child dependency ratio and the aged dependency ratio:


Inverse


The inverse of the dependency ratio, the inverse dependency ratio can be interpreted as how many independent workers have to provide for one dependent person (pension & expenditure on children)

Problems


A high dependency ratio can cause serious problems for a country. As the largest proportion of a government's expenditure is on health, social security & education which are most used by old and young population. Also the increasing expenditure on pension becomes a problem too.

Migrant Labor Dependency Ratio


Migrant Labor Dependency Ratio (MLDR) is used to describe the extent to which the domestic population is dependent upon migrant labor.

See also

  • Demographic economics
    Demographic economics
    Demographic economics or population economics is the application of economics to demography, the study of human populations, including size, growth, density, distribution, and vital statistics.Analysis includes economic determinants and consequences of:...

  • Economic collapse
    Economic collapse
    There is no precise definition of an economic collapse. While some might consider a a severe, prolonged depression with high bankruptcy rates and high unemployment an economic collapse, others would additionally look for a breakdown in normal commerce, such as hyperinfalation, or even a sharp...

  • Employment-to-population ratio
    Employment-to-population ratio
    The Organization for Economic Co-operation and Development defines the employment rate as the employment-to-population ratio. This is a statistical ratio that measures the proportion of the country's working-age population that is employed...

  • Generational accounting
    Generational accounting
    Generational accounting is a relatively new method of national accounting for measuring redistribution of lifetime tax burdens across generations from social insurance, including social security and social health insurance...

  • Pensions crisis
    Pensions crisis
    The pensions crisis is a predicted difficulty in paying for corporate, state and federal pensions in the U.S. and Europe, due to a difference between pension obligations and the resources set aside to fund them. Shifting demographics are causing a lower ratio of workers per retiree, while retirees...

  • Sub-replacement fertility
    Sub-replacement fertility
    Sub-replacement fertility is a total fertility rate that leads to each new generation being less populous than the previous one in a given area. In developed countries sub-replacement fertility is any rate below approximately 2.1 children born per woman, but the threshold can be as high as 3.4...

  • Societal collapse
    Societal collapse
    Societal collapse broadly includes both quite abrupt societal failures typified by collapses , as well as more extended gradual declines of superpowers...



Case studies:
  • Aging of Europe
    Aging of Europe
    The Ageing of Europe, also known as the greying of Europe, is a demographic phenomenon in Europe characterized by a decrease in fertility, a decrease in mortality rate, and a higher life expectancy among Europeans.-Overall trends:...

  • Aging of Japan
    Aging of Japan
    The ageing of Japan outweighs all other nations with the highest proportion of elderly citizens, 21% over the age of 65. In 1989, only 11.6% of the population was 65 years or older, but projections were that 25.6% would be in that age category by 2030...


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