Favourable age structure as a starting point
A demographic dividend requires a specific age structure in the population, arising during the demographic transition. During its socio-economic development, every country experiences a shift from high to low mortality and fertility rates. As a result of improved nutrition and hygiene, mortality rates initially decrease, while fertility rates remain high for some time. This temporarily leads to high population growth. Fertility rates eventually start to decline once there is awareness of lower child mortality, when education levels and incomes rise, gender equality improves and individuals have greater freedom to make their own life choices.
Working towards a demographic bonus
As a result, population growth begins to slow and the age structure shifts. When the number of children decreases, the share of the working-age population rises. A relatively large number of people can work, while at the same time there are fewer children and a small old-age population to support. When the ratio of the working age population (15 to 64-year-olds) to the dependent population reaches 1.7, a demographic window of opportunity opens. With additional strategic investment and the necessary policies, this demographic bonus can be transformed into economic growth – a demographic dividend.
No easy task
As promising as the concept appears, a demographic dividend is by no means guaranteed for all countries. There are a number of conditions: for birth rates to fall and the age structure to change, people's living conditions must improve in numerous ways. To turn the demographic bonus into a dividend, the working-age population needs high quality education at all levels and, above all, jobs. Without these prospects, many young people of working age may remain in poverty, potentially creating frustration, social tension and conflict. Rather than a dividend, the result can be a "demographic disaster".