Population Dependency
Population dependency is determined by the number of dependents belonging to a given population. A country abundant with children is called a youthful population. On the other hand, a country with a large elderly population is called an ageing population. In studying high dependent populations, we see that both cases have their own implications on the whole population. Either case also has the potential to lead to a number of problems.
Dependency Ratio
The dependency ratio is the ratio between a population’s workers and its dependents. Simply put, the dependency ratio is the ratio between people of working age and people who are not of working age. It also effectively paints a picture of the constitution and make-up of a population. The dependency ratio is also known as the total dependency ratio or the youth dependency ratio.
A country’s dependents include those aged 0 – 14 and those over the age of 65. Meanwhile, a country’s working population often includes those aged 15 – 64. The dependency ratio divides these two groups and provides us with an insight into which members of the population are more likely to earn their own income, and which members are most unlikely to earn their own income.
A population’s dependency ratio is a demographic indicator that provides information on the number of people of working age in a country, as compared to the number of people of non-working age. The dependency ratio may also be used to draw inferences regarding the workforce’s relative economic burden. It may also serve as a guide for taxation and its implications on the whole population.
The formula for the dependency ratio can be determined as below:
The Analysis of Dependency Ratios
Dependency ratios are often used to determine which percentage of the total population can be classified as part of the workforce and will therefore support those of non-working age. By analysing dependency ratios, economists can also track trends, shifts, and changes in a given population. For example, if a population experiences a rise in non-working constituents then those of working age will likely bear the load of the increased taxes needed to support the increasing dependent population.
There are also times when the dependency ratio is adjusted to reflect dependency in a population more accurately. This is because the elderly, those dependents aged 64 and above, often necessitate more government assistance when compared to those aged 15 and below. Hence, the rise in the overall age of a population could mean the modification of the dependency ratio to better reflect the needs of an ageing population.
Limitations
It is important to note that the dependency ratio only considers age as a way to tell whether or not a person is actively contributing to a country’s economy. However, the fact remains that not all people of working age are actually working. In reality, other factors aside from age play a part in determining if a person is working. This includes disability, illness, status as a student, unemployment, stay-at-home parents, and early retirement.
Additionally, not all people of dependent age are not working, as some individuals still choose to work past retirement age.
High Dependency Ratio
In general, when a population has a high dependency ratio, it means that it has more people of non-working age. This has certain implications on the rest of the population and a country’s economy. The dependents of a population do not work, hence they do not earn any income and cannot support themselves. In this case, the people that are of working age have a greater burden in terms of supporting the dependents of a population.
Often, due to different employment regulations, it is unlikely for individuals younger than 15 years of age to be working for their personal income. It is most usually expected of individuals past 64 years of age – considered to be the normal retirement age – to retire and no longer be part of the workforce. The unlikelihood of those aged 0 – 14 and those above the age of 64 to be making any sort of income makes them dependent on the support of the working members of the population.
LEDC (Youthful Population)
LEDC stands for Less Economically Developed Country. LEDCs, or Less Economically Developed Countries, are poor countries. These are poor countries with a low standard of living and a low GDP.
Advantages
One advantage of youthful populations is that in the future, they will serve as a formidable workforce. When a high number of young individuals grow up and become part of the workforce, they will provide the population with abundant and cheap labour. Additionally, youthful populations also allow for the development of a growing market for many manufactured products.
Disadvantages
However, youthful populations also have their own drawbacks and disadvantages. One of which is the considerable stress such a largely dependent population puts on many of a country’s resources. A large number of young people in a population puts strain on education, health services, food supplies, housing and accommodation. Additionally, it may also lead to limited job opportunities in the future.
Solutions
There are a few solutions to the problems associated with such a large percentage of young members in a population. One solution is to practice responsible family planning. This potentially reduces the number of unplanned conceptions, and in turn, would reduce the number of live births. Another solution is to industrialise the economy and to provide the future workforce with jobs in manufacturing.
MEDC (Ageing Population)
MEDCs or More Economically Developed Countries are rich countries. These countries are developed countries, have a high standard of living, and a sizable GDP.
Advantages
An advantage of ageing populations is the large percentage of older people with years of valuable experience in the workforce. Ageing populations also act as an ideal market for many products designed for leisure and health. Additionally, populations with a larger proportion of elderly individuals inspire construction booms in locations deemed ideal for retirement. One such example is the Costa del Sol in Spain.
Disadvantages
On the other hand, countries with ageing populations are burdened with the high cost of providing multiple services to the elderly. Pensions, health care, and housing for older individuals result in an increase in the taxation on the smaller percentage of the population actively working.
The younger constituents of MEDCs are also indisposed for producing products for export, as many of them are employed in the care of the elderly. This dampens a country’s ability to compete with other economies.
Solutions
In response to these challenges, some solutions include the abolition of state pensions, delaying the age of retirement, and the increase of taxes. Other solutions include selling the homes of the elderly to fund their retirement care and identifying “retirement colonies” in LEDCs.
High Dependent Population
MEDCs (More Economically Developed Countries) often have populations that have much longer lifespans than those observed in LEDCs (Less Economically Developed Countries). As more and more people live beyond the retirement age of 65, these populations experience an increase in dependency ratios. These populations are called high dependent populations, or simply, ageing populations.
Effects of a High Dependency Population
Lower tax revenue
Since people at the age of retirement no longer have jobs to sustain them, they are only required to pay a reduced income tax. In addition to this, people belonging to the working-age group become burdened with the responsibility to pay more taxes.
Higher government spending
A higher dependent population also requires the government to increase spending on a state pension and other benefits such as a minimum income guarantee. Additionally, the government must also respond to increasing demands for indirect spending for the benefit of the retired members of the population. This is especially observable in public health services, as people over 65 often require more medical attention and treatment. A rise in the dependent population, and a rise in the dependency ratio, would generally mean more government spending.
Potentially higher taxes
The additional strain on government finances has the potential to move towards the imposition of higher taxes on an already declining working population. In turn, the increase in taxes could also demotivate the workforce and decrease their disposable income. As a result, the government may resort to collecting revenue from other methods such as wealth taxes or indirect taxes.
Lower pension funds
As the number of retired individuals in a population rises, the available funds for pensions would have to be divided for a greater number of people. Often, government pension funds are not originally planned to support such a sudden increase in the dependency ratio. In addition, these lead to a decrease in the average income that retired individuals can receive from the government.
Raising the retirement age
In order to compensate for the increasing funds needed for pensions, it is possible for both the public and private sectors to be pressured into raising the retirement age. Simply put, this means that people will be required to work for longer and can no longer retire as early as before. In the United Kingdom, Tesco was the first private firm to raise its retirement age to 67.
Inequality
When the age for retirement is raised, so is the age of eligibility for a state pension. This has various implications for people belonging to different socio-economic sectors. Individuals who have accumulated a substantial private pension would probably not be that much affected by this change. They may even be able to choose when they retire. However, individuals without this privilege must work for longer to be eligible for a state pension.
Competitiveness
A rise in the dependency ratio potentially impacts an economy’s propensity for international competitiveness. This is especially true in the case that its dependency ratio increases at a rate faster than the international average. A decrease in the size of the working population, together with an increased tax burden, could lead to lower productivity rates. Ultimately, this would also translate to a decline in an economy’s ability to compete with other countries.
Frequently Asked Questions
What is a high-dependent population?
A high dependent population refers to a demographic group that relies heavily on others for support and assistance in meeting their daily needs, often due to factors such as age, disability, or illness.
Who typically belongs to the high dependent population?
The high dependent population includes infants, young children, older adults, individuals with disabilities, and those with chronic illnesses who require significant care and support from others.
What are some challenges associated with a high dependent population?
Challenges include the need for specialized healthcare, social services, caregiving support, and financial resources to meet the unique needs of this population. It can also strain the resources and capabilities of families, healthcare systems, and social welfare programs.
How can society support the high dependent population?
Society can support the high dependent population by ensuring accessible healthcare and social services, promoting inclusivity, providing caregiver support, implementing policies that protect their rights, and creating age-friendly or disability-friendly environments.
What role does technology play in supporting the high dependent population?
Technology can play a significant role in supporting the high dependent population by enabling remote healthcare monitoring, assistive devices, communication aids, and accessibility features in infrastructure and digital platforms. These advancements can enhance independence and improve the overall quality of life for this population.
Resources
Implications of higher dependency ratio. (n.d.). Retrieved from Economics Help: https://www.economicshelp.org/blog/5066/economics/implications-of-higher-dependency-ratio-2/
Population Dependency. (n.d.). Retrieved from Barcelona Field Studies Centre: https://geographyfieldwork.com/PopulationDependency.htm
Dependency Ratio. (n.d.). Retrieved from Investopedia: https://www.investopedia.com/terms/d/dependencyratio.asp
MEDCs and LEDCs. (n.d.). Retrieved from Revision World: https://revisionworld.com/gcse-revision/geography/development/medcs-and-ledcs
Contrasts in Development. (n.d.). Retrieved from Bitesize: https://www.bbc.co.uk/bitesize/guides/zs7wrdm/revision/3