Calculating the Dependency
Ratio
AP Human Geography
Retired
Dependents
Workforce
Child
Dependents
Source US Census Bureau
International Data Base
Retired
Dependents
Workforce
Child
Dependents
Dependency Ratio
• The ratio between the number of dependants (anyone above
or below the working age) and the number of people in the
potential labor force.
• young dependents (YD): Anyone younger than 15
• old dependants (OD): Anyone 65 and older
• Dependency ratio =
YD + OD
x 100
People of working age
Calculating Dependency Example
• Dependency ratio =
YD + OD
x 100
People of working age
YD= 500
OD= 250
People of working age = 600
• Dependency ratio =
500 + 250
x 100
600
Dependency Ratio = 125 (which means that for
every 100 workers, there are 125 not working)
Importance of Dependency Ratio
• It’s important because it shows the ratio of
economically inactive compared to active.
• Economically active will pay much more
income tax
• Economically inactive (dependents) are bigger
recipients of government spending
(education, pensions and health care)
Forecast for Dependency Ratios
Solutions for Higher Dependency
Ratios
• Raising retirement age in line with longer life
expectancies
• Encouraging immigration of people in early
20s and 30s
• Reduced government funded pensions and
encouraging private pensions (401K/403B)
Costs and Benefits of Ageing and
Youthful Populations
Ageing Populations
Causes
Costs
Benefits
Life expectancy has increased, causing
increased proportions of elderly
1. Heavy Burden on state finances through
pensions and welfare payments.
2. Large demands on health systems
3. Reduced workforce
4. Population decline- if there’s also
declined birth rates
1. Workforce can work longer
2. Elderly can help look after grand-children
which allows parents to work full-time.
Youthful Populations
Causes
Costs
Benefits
Many LEDCs are have high birth rates.
1. High demand for education.
2. Need for many women to stay at home
to care for children
3. High rates of unemployment
4. Increased poverty- more people are
born into families, which are already
poor.
1. Large potential workforce often leading
to cheap labor, which can attract new
investment.
2. Less money is spent on healthcare.
Guided Practice
• Use the Age/Sex Structures for Area A and B
to complete the questions on the back to
ultimately calculate the dependency ratios for
both areas.
• Raise your hand if you need help.