Concept of Dependency ratio.

INTRODUCTION:- The term Dependency Ratio refers to the number of dependents every 100 persons. The total population of a region or a country is divided into two broad categories:- 

(1) Economically active population  

(2) Economically non-active population 

The first category is also called independent population or working population. The second category is known as the dependent population. The economically active population constitutes that part of the total population that is actually engaged in various economic activities or gainful jobs. Economically nonactive population constitutes that part of the total population that does not engage in gainful employment to earn a livelihood. The non-active population includes females engaged in household duties, children, students, pensionaries, senile age group, etc. 

DEFINITION:- The proportion of the person above 60 years and children below 15 years of age are considered to be dependent over economically productive age group (15-59). The ratio of the combined age group of the dependent population to the economically productive population is referred to as Dependency Ratio or Societal Dependency Ratio. It is normally expressed as a percentage. 

FORMULA:-

•  Dependency Ratio= Population(0−14)+Population(60 years and above) /working Population (15−59)×100                             

The dependency ratio can be divided into two parts: -

(1)Young age dependency ratio                                                                                      

(2)Old age dependency ratio 

(1) Young Age Dependency Ratio:- The young age dependency ratio is the ratio of the number of young people at an age when they are generally economically inactive, compared to the number of people of working age (i.e. 15-59).  

• Young Age Dependency Ratio=No.of persons in an age group 0−14 years/No.of persons in an age  group 15−59 years

(2) Old-Age Dependency Ratio:- It measures the number of those aged above 60 years who does not economically able to do work and are dependent on economically active aged (15-59). 

•  Old-Age Dependency Ratio= No.of persons in an age group 60 years and above/No.of persons in an age group15−59 years.

RELATIONSHIP BETWEEN YOUNG AGE AND OLD-AGE DEPENDENCY RATIO: -

(1) If the old-age dependency ratio is very high, then the young-age dependency ratio is very low and vice-versa. 

(2)  There exists a negative correlation between young age and old-age dependency ratio. 

(3) If the young age dependency ratio is very high, then the fertility rate is very high in the population which tends to overpopulation. 

(4) If life expectancy is very high, then the old-age dependency will be very high and young-age dependency automatically decline. 

(5) Doughnut diagram can be used to show the relationship between young age and old-age dependency ratio.  

WHY DEPENDENCY RATIO IS CONSIDERED A CRUDE MEASURE OF POPULATION? 

There are changes in society. We are considering only young dependency and old dependency but there are some people below 15(child labor) and above 60 workings (Post-retirement employee). So, they are effectively contributing to economic activities. Within 15-59 age groups some may earn more and may earn less and some not at all. But they are considered in the main workforce. Though they may not work within them. Due to accidents, chronic diseases some may not work permanently. But their entire share is very nominal in the total economic active workforce.  

       SELECTED STATEWIDE DEPENDENCY RATIO OF INDIAN POPULATION (2011) 

SELECTED STATEWIDE DEPENDENCY RATIO AND WORKING POPULATION(2011)

Data Source: Indiastat.com 

From the above diagram, we can see that the workforce in Haryana is high because of its high economic development and agricultural activity. Both males and females are engaged in those sectors. It is the most economically developed region in south Asia. This is only due to the healthiest workforce in the state. The percentage share of contract workers in the organized manufacturing sector has increased from 13% in 1995 to 34% in 2011 (International Research Journal of Human Resources and Social Sciences, July 2017). It seems that the young age dependency ratio is also high due to the social norms and preferences of sons. But old-age dependency ratio is comparatively low. 

   In West Bengal due to the positive presence of demographic indicators the share of the young dependency ratio is comparatively low (low fertility) and the old-age dependency ratio is high due to the increase in longevity. But in the economic scenario is comparatively low than other states. 

      The highest young dependency ratio is found in Bihar due to high fertility, low literacy rate, and social norms and awareness. And here also the female participation in the economic sector is lesser than males. Here seems that the low old-age dependency ratio is due to the low longevity, the less developed health sector. the population is mainly engaged in the agricultural sector. And the rest are the migratory labor force. Therefore, it’s called the MONEY ORDER ECONOMY.  

   In Kerala, the old-age dependency ratio is high and the young age dependency ratio is comparatively slow and it belongs to the 1st half of the 4th stage of Demographic Transition.                           

  

             CHANGING NATURE OF DEPENDENCY RATIO OF INDIAN POPULATION 

                  THE TREND OF DEPENDENCY RATIO IN INDIA(1961-2011)

                                                                                                            Data Source: Census of India 

         

          CHANGING NATURE OF DEPENDENCY RATIO OF INDIAN POPULATION 

We find that there are structural changes are taking place in the above-said age groups, particularly after 1961. The share of the child population (0-14) is continuously declining due to the rapid fall of the Crude Birth Rate. A downward trend of crude birth rate occurring due to these factors: 

(1) Improvement takes place in the medical sphere 

(2) availability of vaccination and doctors 

(3) family planning 

(4) Govt. took the initiative role during that time.  

On the other hand, the working population (15-59) is continuously increasing after 1971 onwards, economic development takes place and their contribution in total GDP is also increasing. 

The trend in the increase in the proportion of the elderly population is steadier and more visible than other age groups. Also, the spread of the change in the share of the elderly population is less than the spread of the other two age groups but very steady and continuous. 

• RELEVANCE: -

(1) A large percentage of the dependent population tends to reduce saving and investment and inhabits the rate of economic and social advancements of a country as a large proportion of scarce resources are diverted towards consumption.  

(2) Dependency ratio gives the proportion of persons whom the persons in economically active age group need to support. 

(3) Reduction in dependency ratio indicates a phase of population transition where a higher percentage of persons in the working-age group may translate into higher per capita income for the economy. 

(4) This is also called the phase where a country may benefit from a ‘Demographic Dividend. 

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