Q. Consider the following statements regarding the dependency ratio in population
1. It is the ratio of people not working/earning to the working/earning population.
2. A lower dependency ratio should ideally result in lower economic growth
Which of the above statements is/are correct?
The dependency ratio is the ratio of people not working/earning to the working/earning population.
For instance, A dropping TFR in India over the years has been reducing the dependency ratio, as there are fewer children below working age dependent on the working population.
So, A lower dependency ratio should ideally result in higher economic growth, as there is a large section of people consuming and saving.
On the other hand, improving living standards and medical advances over the past 40-50 years have prolonged life spans, thereby skew the dependency ratio at the other end of the age spectrum.
Source: Live Mint