Fundamentals of Business

Dependency ratio

7.1.11 Dependency ratio

In economics, the dependency ratio is the ratio of the economically dependent part of the population, to the productive part. The economically dependent part is recognised to be children who are too young to work, and individuals that are too old, that is, generally, individuals under the age of 15 and over the age of 65. The productive part makes up the gap in between (ages 15 - 64).

This gives

This ratio is important because as it increases, there is increased strain on the productive part of the population to support the upbringing and pensions of the economically dependent. There are direct impacts on financial elements like social security.

The term demographics is often used erroneously for demography, but refers rather to selected population characteristics as used in government, marketing or opinion research, or the demographic profiles used in such research.

Demography the study of human populations, primarily with respect to their size, structure, and development. It is often divided into formal demography, concerned with the statistical manipulation of data relating to purely demographic variables, such as births, deaths, and migration, together with the refinement of analytical techniques to measure these events; and the wider field of population studies, including the study of fertility, mortality, and migration in their wider social, economic, and behavioural context using qualitative as well as quantitative methods.

Both formal demography and population studies have important practical applications. Administrative bodies at all levels, from national governments to town councils, as well as international organizations, place a high priority on the gathering, processing, and interpretation of demographic data.

Changes in fertility, mortality, and migration, for example, have social, economic, cultural, and political impacts, so demography is an essential part of policy analysis and development.