The dependency ratio tells us how many young people (age group 0 to 19) and older people (age group 66 and older) depend on people of working age (age group 20 to 65).
The dependency ratio is worked out with this formula:
number of 0 to 19 years-olds + number of people aged 65+
--------------------------------------------------------------------------------- x 100%
number of 20 to 65 years-olds
Example: Pakistan
A worked example should make this clearer. Pakistan, which is a developing country, has 41% of its population less than 20, and 4% over 65. This makes 55% (100 - (41+4)) between the ages of 15 and 64.
Dependency ratio of Pakistan
(41) + (4)
= ---------------- x 100
55
45
= ----- x 100
55
= 81.8
Example: New Zealand
New Zealand, a developed country, has 23% of its population less than 20, and 12% over 65. This makes 65% between 15 and 64.
Dependency ratio of New Zealand
(23) + (12)
= ---------------- x 100
65
35
= ----- x 100
65
= 53.8
Countries that have a high dependency ratio have more people who are not of working age, and fewer who are working and paying taxes. The higher the number, the more people that need looking after.
