Abstract:

The use of dependency ratios, which express the relationship between productive & dependent portions of a population, in measuring the economic impact of population aging is examined. Three general categories of dependency ratios & their limitations are identified: (1) societal dependency ratios ignore the costs of transfer of goods & services from productive to dependent groups & they view earned income as the only mechanisms of transfer from one group to another (2) labor force dependency ratios use unwarranted labor force projections (3) segmental dependency ratios are unduly treated as closed systems & exclude one dependent group from analysis. The cause underlying the economic burden of the industrialized world is not changing demographics, but an outmoded economic system.