How does the dependency ratio impact a country's economy?

The dependency ratio is a crucial demographic indicator that reflects the balance between the working-age population (typically those aged 15-64) and the non-working-age population (generally those under 15 and over 65). A higher dependency ratio means that there are more dependents (children and elderly) per working-age individual. This situation can place a strain on the economy, as a larger proportion of the population is not actively contributing to economic output through employment, resulting in a heavier burden on the working population to support social services, healthcare, and education.

This indicator directly impacts a country’s economy by influencing labor force dynamics, productivity, and overall economic growth. When a high dependency ratio persists, it can lead to decreased savings and investment, limited economic development opportunities, and increased public spending on social services, which may ultimately hinder economic stability and growth. In contrast, a lower dependency ratio typically indicates a greater ratio of workers who can contribute to the nation’s wealth and economic activities, fostering better economic conditions.

The other aspects mentioned in the options—such as the percentage of retired individuals, school enrollment numbers, or average lifespan—are related demographic factors but do not capture the essence of what the dependency ratio specifically indicates regarding the balance of working and non-working