In economics, the dependency ratio shows the relationship between the number of people not in the labor force and those in the labor force.
Those not in the labor force are the dependent part of the population.
Those in the labor force are the productive part of the population.
A high dependency ratio means that there are fewer working people to support health, social security and education services, which are used by the dependent sectors of a population.
This number is calculated by adding together the total number of young and old people and dividing that number by the number of working age people.
(The dependency ratio shows the relationship between the dependent and productive parts of a population.)
Sometimes the dependency ratio is presented in two parts.
One part focuses on the ratio between children and the working age population.
This is the dependency ratio for the young.
The other is the ratio between the elderly and the working age population, which is the dependency ratio for the old.
Here are some dependency ratios for the old in 5 countries: China, India, Japan, the US and the UK.
It shows the ratios at 3 different points of time: 2000, 2015, and 2050.
Note that the greatest percentage change from 2015 to 2050 is for China.
The dependency ratio nearly triples, from 13.1 to 39.
The other countries show gains, but as a percentage increase, they are less.
In Japan the ratio increases from 43.6 to 71.8, which is less than double.
The life expectancy for Japan in 2050 is predicted to be 93, which is the highest of these countries.
A high life expectancy obviously increases the dependency ratio.
And note that the dependency ratio ignores the fact that those counted in the elderly segment of a population are not necessarily dependent.
An increasing proportion of them are working, and many of those in the working age segment may not be working.
So this way of calculating the dependency ratio in a country can be misleading.
By pointing this out, we can see the danger of using such numbers to make policy without understanding how they are calculated.
In the end, details are important.
(The higher the life expectancy, the higher the dependency ratio.
When using numbers like dependency ratios, one needs to understand how they are calculated.)
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