Demographic Dividend Analysis

1119 Words5 Pages
The attitude of demographers and economists about the role of population in economic development has undergone a dramatic change in recent years-from a pessimistic to an optimistic view. Earlier many scholars believed that rapid growth of population puts a constraint on faster growth by diverting resources from investment to consumption. The more recent view holds that the process of demographic transition resulting from a fast decline in mortality rates and a slower decline in birth rates creates a population bulge initially in the younger age group, but creates a window of opportunity later when the young join the work force. The demographic dividend hypothesis relies on the changes in the age structure of population leading to a rise in…show more content…
Firstly, demographic transition adds to the labour supply as a larger number of young people join the working age groups. Moreover, more women are likely to enter the workforce as family size declines. Secondly, the demographic transition is supposed to encourage the growth of savings as the working age people save more as compared to the young and the old consume more than they produce. The increased private household savings provide the capital accumulation needed to finance growth. Finally, the demographic transition is supposed to have significant effects on investments in human capital. Higher life expectancy brings encourages people to investment more in education of their children. Thus, the new work force is younger, healthier and more productive contributing further to economic…show more content…
If the economy does not generate sufficient jobs for the new entrants in the labour force, the demographic dividend is likely to turn into demographic disaster. The experience of the two decades of economic reforms does not generate optimism in this regard. The acceleration in the growth rate witnessed in the post reform period is not matched by growth in employment. During 2004-05 to 2011-12, employment in the Indian economy increased by a mere 74.9 million at a CAGR of only 0.5 per cent. Moreover, the quality of employment has worsened during the period as most of the jobs have been created in the low productivity agriculture and informal non-agricultural

More about Demographic Dividend Analysis

Open Document