Modifications of Traditional Formulas to Estimate and Project Dependency Ratios and Their Implications in a...

Traditional dependency ratios based on the United Nations' old age definition (≥ 65 years) appear to be an inappropriate indicator for many developing countries, including Bangladesh. Bangladesh, with a retirement age of 59 in many sectors, defines old age as ≥ 60 years, whereas the United Nations documents 60-64 years as working age. This study offers two modifications to the traditional formulas of dependency ratios and compares the modified measures against the traditional measures from 1975 to 2100. Using data from the United Nations and the World Bank, (i) we moved the cut-off for 'old age' to 60 instead of 65 years, considering 15-59 years as 'potentially working', and (ii) we used the economically active population instead of the entire working-age population. Using our modified calculations, the growth rate of older adults (≥ 60 years) will be at its peak (4.6%) between 2020 and 2030 and continue to increase until 2085, though we will observe a negative population growth after 2055, and 2020-2040 appears to be the best time for reaping the highest demographic dividend. Compared to our modification, the traditional formula undercounted the older adults substantially, predicting a much lower demographic and financial burden. The modifications and associated estimates are important in advancing our understanding of dependency ratios in Bangladesh and have policy and practical implications in preventing the inaccurate representation of demographic and financial issues, and they are useful for planning for geriatric care, social safety nets, and healthy aging. The modified formulas may also be applicable in other countries which adopt ≥ 60 years as an old-age threshold.

The online version contains supplementary material available at 10.1007/s11113-022-09720-8.