Demographic dividend

Recent research shows that the demographic dividend is an education-triggered dividend. ==Statistical overview==

Approximately 1.8 billion people between 10 and 24 years old exist in the world today; the highest total number of young people than ever before. ==Examples==

East Asia East Asia provides some of the most compelling evidence to date of the demographic dividend. The demographic transition in East Asia occurred over 5–15 years during the 1950s and 1960s, a shorter time period than anywhere previously. During this time, East Asian countries invested in their youth and expanded access to family planning allowing people to start families later and have fewer children. More resources began to become available, investment in infrastructure began and productive investments were made as fertility rates fell resulting in unprecedented economic growth. For example, UNFPA stated that "The Republic of Korea, saw its per-capita gross domestic product grow about 2,200 per cent between 1950 and 2008 and Thailand’s GDP grew 970 per cent." Ireland Ireland also provides a recent example of the demographic dividend and transition. Faced with a high birth rate, the Irish government legalized contraception in 1979. This policy led to a decline in the fertility rate and a decrease in the dependency ratio. It has been linked as a contributing factor to the economic boom of the 1990s that was called the Celtic Tiger. During this time the dependency ratio also improved as a result of increased female labor market participation and a reversal from outward migration of working age population to a net inflow. Africa Africa, on the other hand has been unique demographically because fertility rates have remained relatively high, even as significant progress has been made decreasing the mortality rates. This has led to a continuing population explosion rather than a population boom and has contributed to the economic stagnation in much of Sub-Saharan Africa. The magnitude of the demographic dividend appears to be dependent on the ability of the economy to absorb and productively employ the extra workers, The U.S. Census Bureau predicts that India will surpass China as the world's largest country by 2025, with a large proportion of those in the working age category. Over the next two decades the continuing demographic dividend in India could add about two percentage points per annum to India's per capita GDP growth. As per Population Reference Bureau India's population in 2050 is predicted to be 1.692 billion people. West Asia The West Asia and North Africa recently experienced a youth bulge in which 15- to 29-year-olds comprise around 30% of the total population. It is believed that, through educational and employment, the current youth population in the West Asia could fuel economic growth and developments as young East Asians were able to for the Asian Tigers. ==Four mechanisms for growth in the demographic dividend==

During the course of the demographic dividend there are four mechanisms through which the benefits are delivered. • The first is the increased labor supply. However, the magnitude of this benefit appears to be dependent on the ability of the economy to absorb and productively employ the extra workers rather than be a pure demographic gift. There is an accompanying indirect effect, as fewer children (and more schooling, see below) allow higher levels of female labor force participation. • The second mechanism is the increase in savings. As the number of dependents decreases individuals can save more. This increase in national savings rates increases the stock of capital in developing countries already facing shortages of capital and leads to higher productivity as the accumulated capital is invested. • The third mechanism is human capital. Decreases in fertility rates result in healthier women and fewer economic pressures at home. This also allows parents to invest more resources per child, leading to better health and educational outcomes. • The fourth mechanism for growth is the increasing domestic demand brought about by the increasing GDP per capita and the decreasing dependency ratio. This includes a possible second-order effect as household production falls, to be replaced by external provision, such as meals away from home and the purchase of ready-made clothing. Low fertility initially leads to low youth dependency and a high ratio of working age to total population. However, as the relatively large working age cohort grows older, population aging sets in. The graph shows the ratio of working age to dependent population (those 15 to 64 years old, divided by those above or below this age range—the inverse of the dependency ratio) based on data and projections from the United Nations. There is a strategic urgency to put in place policies which take advantage of the demographic dividend for most countries. This urgency stems from the relatively small window of opportunity countries have to plan for the demographic dividend when many in their population are still young, prior to entering the work force. During this short opportunity, countries traditionally try to promote investments which will help these young people be more productive during their working years. Failure to provide opportunities to the growing young population will result in rising unemployment and an increased risk of social upheaval. ==After the demographic dividend, demographic tax==

The urgency to put in place appropriate policies is magnified by the reality that what follows the "demographic dividend" is a time when the dependency ratio begins to increase again. Inevitably the population bubble that made its way through the most productive working years creating the "demographic dividend" grows old and retires. With a disproportionate number of old people relying upon a smaller generation following behind them the "demographic dividend" becomes a liability. With each generation having fewer children, population growth slows, stops, or even goes into reverse. This trend may be deemed a demographic tax or demographic burden. This is currently seen most dramatically in Japan, with younger generations essentially abandoning many parts of the country. Other regions, notably Europe and North America, will face similar situations in the near future, with East Asia to follow after that. China's dependency ratio has increased from 37 in 2011 to 45 in 2022. This represents the number of dependents, children, and people over 65 per 100 working adults. ==See also==