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Dependency and Ageing Ratios

Explain dependency and ageing ratios. 


Dependency and Ageing Ratios

Explain dependency and ageing ratios. 


Ageing ratio / old age dependency ratio

the proportion of people 65 years old and over to the total population.

Dependency ratio

the ratio of the number of people under 15 and over 64 years to those 15–64 years of age.


Elderly dependency ratio  

the ratio of the number of people aged 65 and over to those aged 15–64 years. 

Youth dependency ratio  

the ratio of the number of people 0–14 to those 15–64 years of age.


Implications of a Higher Dependency Ratio

  1. Lower Tax Revenues - retired people pay lower income tax. Therefore, the working age population has a greater responsibility to pay tax.

  2. Higher Government Spending - the government is committed to paying a state pension and related benefits such as a minimum income guarantee. There are also greater demands for indirect spending on retired people. People over 65 are more likely to require treatment by the NHS. Therefore, there are greater demands placed on government spending by a rise in the dependency ratio.

  3. Higher tax rates - a declining working population pay more taxes as a result of the pressures on government finances. This could create disincentives to work and reduce disposable income. The government may be forced to collect more revenue from indirect taxes or wealth taxes.

  4. Lower pension funds - because of the rising percentage of retired people, pension funds are having to stretch further than before. Many pension funds haven’t planned for the rapid rise in the dependency ratio. Combined with the credit crisis and low interest rates, the average income retired people can expect has fallen.

  5. Pressure to raise retirement age - because of the increased cost of pensions there is pressure to raise the retirement age in both the private sector and public sector. Tesco’s recently announced it will be the first private firm in the UK to raise its pension age to 67. This is an attempt to reign in the costs and meet the pension shortfall they currently have.

  6. Inequality -raising the state pension age will have different effects. Some people with a substantial private pension will not really be affected. They can still choose to retire when they want. However, others with no or minimal state pension will have to work longer.


Labour Market Implications

A higher dependency ratio could lead to labour shortages as firms struggle to recruit sufficient numbers of workers. Firms may have to respond by encouraging older workers to stay in work for longer. There may be an increase in ‘semi-retirement’ – where older workers stay in work part-time to supplement smaller pensions.

Economic Implications

A higher dependency ratio is likely to reduce productivity growth. A growth in the non-productive population will diminish productive capacity and could lead to a lower economic growth. If the government fails to tackle issues relating from a higher dependency ratio, there could be increased pressures placed on government finances, leading to higher borrowing or higher taxes which also reduce economic growth.

Social Implications

The retired population will make up a bigger share of the population. Therefore, they will have a bigger political voice. It may require different attitudes to how we care for old people, e.g. should someone’s house be mortgaged to pay for their health care? Should responsibility for looking after old people fall on the state or should private charity and family play a greater role?



Ageing Populations

Examine the impacts of ageing populations

Ageing Populations

Examine the impacts of ageing populations


how an ageing population will change the world


case study: japan's ageing population



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  1. Describe the changes to Switzerland's population structure.
  2. Explain the factors responsible for this change.
  3. Describe the changes in old-age dependency ratio between 1990and 2010. Refer to data in your answer.




  1. In groups, create a mini-lesson teaching about a case study of youthful and ageing populations
  2. The 'lesson' should be 15 minutes long and include:
    • Population pyramid of the country
    • Short explanatory video
    • Map
    • News article
    • A selection of learning activities
    • Quiz

EXAM practice

Explain the economic impacts of an ageing population in one or more named countries [5 marks] 


Mark scheme

A valid country should be chosen as an example [1 mark].

Award 1+1 marks for each valid economic impact, provided that it is developed by means of explanation or detail.

Possible impacts could be:

  • increased dependency ratio
  • potential shortage of labour
  • reduced revenue from taxation
  • reduced savings/investment
  • increased demand on state pensions
  • increased demand on services/welfare for the elderly
  • increased insurance premiums
  • lower economic growth
  • introduction of mandatory pension schemes
  • issues of younger family members having to care for the elderly.
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Population Policy: Pro & Anti-Natalist

Evaluate examples of a pro-natalist policy and an anti-natalist policy

Population Policy: Pro & Anti-Natalist

Evaluate examples of a pro-natalist policy and an anti-natalist policy



  1. Read and highlight the article
  2. Identify named countries and their type of policy (pro or anti-natal)
  3. Evaluate their success by listing examples of successes and failures

pro-natalist policy



In 1939, the French passed the “Code de la famille”, a complex piece of pro natalist legislation. The pro natalist methods in the policy included:

  • Offering cash incentives to mothers who stayed at home to care for children.
  • Subsidising holidays.
  • Banning the sale of contraceptives (repealed in 1967).

Incentives offered in the policy included:

  • Payment of up to £1064 to couples having their third child.
  • Generous maternity grants.
  • Family allowances to increase the purchasing power of three child families.
  • Maternity leave on near full pay for 20 weeks for the first child to 40 weeks or more for the third child.
  • 100% mortgage and preferential treatment in the allocation of three bedroom council flats.
  • Full tax benefits to parents until the youngest child reaches 18.
  • 30% fare reduction on all public transport for three child families.
  • Pension schemes for mothers/housewives.
  • Child-orientated development policies e.g. provisioning of creches, day nurseries etc.
  • Depending on the family’s income, childcare costs from virtually nothing to around €500 a month for the most well off of families.
  • Nursing mothers are encourage to work part-time or take a weekly day off work.




Having successfully reduced birth rates for two decades, Iran is now trying to increase birth rates to avoid the problems of an ageing population.

Measures include:

  • Sermons urging worshippers to have more children
  • Vasectomies (operation to make men infertile) banned
  • Government budgets for reducing fertility stopped
  • Maternity leave increased from 6 to 9 months
  • Fathers to receive 2 weeks' holiday on birth of child
  • Gold coins given to new births



anti-natalist policy IN CHINA