What is Demographic Dividend?

Demographic Dividend is a phenomenon which occurs when the proportion of working population out of the total population is high. According to the United Nations Population Fund (UNFP), it simply means, “the economic growth potential resulting from shifts in a population’s age structure, mainly when the share of the working-age population (15 to 64) is larger than the share of non-working-age population (14 and younger, and 65 and older).”

A country is expected to reap the demographic dividend when the share of its working population is larger than the share of its non-working population. India is currently going through a phase of the demographic dividend. As per the population research carried out by the United Nations (UN), the countries located in Latin America and Asia are reaping the maximum benefit of the demographic dividend. The developed countries have had their peak times and now their percentage of the dependency ratio is high (Dependency ratio can be defined as the ratio of the non-working and working population). Further, China’s one child policy reversed the demographic dividend it reaped since the 1960s. Dependency ratio will remain high due to factors like  

  • Ageing population
  • Low birth rate
  • High Life expectancy
  • Low death rate

Demographic Dividend and Development

To reap the benefits of the demographic dividend, countries have to take some special measures that are aimed at economic development and better living standards. They need to invest in the following to get the maximum benefits of Demographic Dividend: 

  • Health and Security
  • Education
  • Employment generation
  • Social security

The peak of the demographic dividend is approaching fast for India. This peak will be reached in the early 2020s for India as a whole; peninsular India will peak around 2020 while hinterland India will peak later (around 2040). This presents an overall good window of opportunity for states in the hinterland in comparison to peninsular India.Failing to act on time can result in unemployment and imbalance in the economy.