15 June 2007

DEPENDENCY RATIO

Demographics Population Core indicator

INDICATOR

(a) Name: Dependency Ratio

(b) Brief Definition: The dependency ratio relates the number of children (0-14

years old) and older persons (65 years or over) to the working-age population (15-64

years old).

(d) Placement in the CSD Indicator Set: Demographics/Population

POLICY RELEVANCE

(a) Purpose: Dependency ratios indicate the potential effects of changes in

population age structures for social and economic development, pointing out broad

trends in social support needs.

(b) Relevance to Sustainable/ Unsustainable development (theme/sub-theme): By

relating the group of the population most likely to be economically dependent (net

consumers) to the group most likely to be economically active (net producers), changes

in the dependency ratio provide an indication of the potential social support

requirements resulting from changes in population age structures. In addition, the ratio

highlights the potential dependency burden on workers and indicates the shifts in

dependency from a situation in which children are dominant to one in which older

persons outnumber children as the demographic transition advances (that is, the

transition from high mortality and high fertility, to low mortality and low fertility). A

high dependency ratio indicates that the economically active population and the overall

economy face a greater burden to support and provide the social services needed by

children and by older persons who are often economically dependent. A high youth

dependency ratio, for instance, implies that higher investments need to be made in

schooling and child-care.

As fertility levels decline, the dependency ratio falls initially because the proportion of

children decreases while the proportion of the population of working age increases. The

period when the dependency ratio declines is known as the “window of opportunity”

when a “demographic dividend” may be reaped because society has a growing number

of potential producers relative to the number of consumers. However, as fertility levels

continue to decline, dependency ratios eventually increase because of the proportion of

working age starts declining and the proportion of older persons continues to increase.

As populations grow older, increases in old-age dependency ratios are indicators of the

added pressures that social security and public health systems have to withstand.

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The need to ensure access to basic services, such as education and health, as well as to

ensure the economic security of children and older persons has been emphasized in

many international conferences and summits, including the World Summit for Children

(1990), the International Conference on Population and Development (1994), the World

Summit for Social Development (1995), The United Nations Millennium Declaration and

the World Assembly on Ageing (2002).

(d) International Targets/Recommended Standards: International agreements do

not specify targets in terms of values of the dependency ratio. However, in 2005, 66 per

cent of Governments were concerned about the size of their working-age population and

for 52 per cent reported that population ageing represented an issue of major concern

(DESA, World Population Policies 2005).

(e) Linkages to Others Indicators: This indicator reflects the cumulative effect of

past demographic dynamics in terms of fertility and mortality and is also related to past

trends in the population growth by age.

METHODOLOGICAL DESCRIPTION

(a) Underlying Definitions and Measurements Methods: The dependency ratio

refers to the number of children aged 0 to 14 years plus the number of persons aged 65

years or over per 100 persons aged 15 to 64 years:

Dependency Ratio =100 x (Population (0-14) + Population (65+)) / Population (15-64)

The dependency ratio can be disaggregated into: (1) the youth dependency ratio, which

is the number of children aged 0-14 per 100 persons aged 15-64, and (2) the old-age

dependency ratio, which is the number of persons aged 65 or over per 100 persons aged

15-64. The dependency ratio, also referred to as total dependency ratio, is the sum of the

youth and old-age dependency ratios. Some studies employ other age groups in

calculating dependency ratios, for instance 0-19 years to represent the population of

children or the population aged 60 or over to represent the population of older persons.

(b) Limitations of the Indicators: The dependency ratio is an approximation to the

ratio of net consumers to net producers. As a proxy for that ratio, the dependency ratio

suggests that children under age 15 as well as persons aged 65 or over are economically

dependent. In many populations, however, people do not stop being economically

active at age 65, nor is it true that all persons aged 15-64 are economically active.

Although older persons often require economic support from others, in many societies

they have economic resources of their own and provide support to their adult children.

Furthermore, as the period of training for a productive life increases, most adolescents

and young adults remain in school and out of the labour force, effectively extending the

period of young-age dependency well beyond age 15. Whenever available, direct

estimates of net producers and net consumers can be used for a more precise assessment

and analysis of economic dependency.

ASSESSMENT OF DATA

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(a) Data needed to compile the indicator: The information on population classified

by age that is necessary to calculate the dependency ratio is usually derived from

censuses or demographic surveys. The United Nations recommends that countries

undertake population censuses every 10 years.

(b) National and international data availability and sources: In recent decades,

most countries have carried out population censuses. National and sub-national census

and survey data are available for the large majority of countries from national sources

and publications, and are reported to the Statistics Division of the Department of

Economic and Social Affairs (DESA) of the United Nations Secretariat by national

statistical offices. For all countries, census and survey data are evaluated and, if

necessary, adjusted by the Population Division of the Department of Economic and

Social Affairs (DESA) as part of the analysis carried out in preparation of the official

United Nations population estimates and projections.

all countries by the Population Division of DESA and appear in the biennial United

Nations publication, World Population Prospects.

AGENCIES INVOLVED IN THE DEVELOPMENT OF THE INDICATOR

(a) Lead Agency: The lead agency is the United Nations Department of Economic

and Social Affairs (DESA). The contact point is the Director, Population Division, DESA;

fax no. (1 212) 963 2147.

(b) Other Contributing Organizations: None

REFERENCES

(a) Readings:

United Nations, World Population Prospects: The 2006 Revision, vol. I: Comprehensive Tables.

http://www.un.org/esa/population/publications/wpp2006/wpp2006.htm

United Nations, World Population Policies 2005 (United Nations publication, Sales No.

E.06.XIII.5, 2006).

(b) Internet site:

http://www.un.org/esa/population/unpop.htm

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