A dependency ratio measures the number of people either too young or too old to work, compared to the number of people within working age. For the statistic’s sake, the working age is considered to be 15 to 64.
Just having a dependency ratio that starts to rise is not a crippling problem. It has to get to significant levels and rates of increase. China could lose 2-3% of GDP growth to dependency ratio increase and still have GDP growth of 8% per year.
The expected rise in dependency ratio was examined for China, India, Japan, Russia and Brazil.
The elderly dependency ratio relates to the age of the cutoff. Many calculations of dependency ratios use 60 years or 65 years as a cutoff. This means that anyone over that age is considered to be a dependent of working age population. China’s leaders can easily make the logical move which many western countries have trouble with politically. They can tell citizens – tough it out work to 70 or 75 or even 80.
Here is a World Health figures for dependency ratios for different countries with an elderly cutoff at 60 years.