Demographic Dividend - After The Demographic Dividend

After The Demographic Dividend

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 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 current independence ratio of 38 is unprecedentedly low. This represents the number of dependents, children, and people over 65, per 100 working adults. This implies that there are nearly twice as many working age people as the rest of the entire population combined. This historically low dependency ratio has been extremely beneficial for China’s unprecedented period of economic growth. This dramatic shift was brought about largely in part due to China’s one-child policy. As a result China is currently aging at an unprecedented rate. China will be older than the United States by 2020 and by Europe by 2030. Combined with the sex-selective abortions widely practiced as a result of the one-child policy – China will have 96.5 million men in their 20s in 2025 but only 80.3 million young women – China’s future demography holds many challenges for the Communist Party.