The age structural transition (cont.)
Dependency ratios
The age structural transition also causes changes in the total dependency ratio and its component parts (the child dependency ratio and the old age dependency ratio).
As fertility rates fall and the number of infants born reduces, the total dependency ratio declines. This is because of the decline in the child dependency ratio.
As long as fertility stays low (or declines further) the total dependency ratio will continue to fall as the large cohorts born before the fertility decline age and enter the work force (increasing the number of economically productive people relative to dependents). However this further decline may be then somewhat counteracted by the number of births increasing, due to the large number of people at reproductive ages (as can be seen in the graph below).
Decades later the total dependency ratio will begin to increase once again. This is due to the increase in the old age dependency ratio, as the large cohorts enter the oldest age groups, and the number of economically productive people relative to dependents reduces once again.
Dependency Ratios for Japan, 1950-2010.
Source: UN Population Division 2011.