ECONOMIC IMPLICATIONS OR EFFECTS OF INCREASE IN THE POPULATION OF DEPENDENTS

ECONOMIC IMPLICATIONS OR EFFECTS OF INCREASE IN THE POPULATION OF DEPENDENTS. The dependants are the population that are between 0-17 years,

which include the infants, pupils in nursery, primary, secondary and those in tertiary institutions, and the old age (over 60 years) that are not working but depend on the working population (18 – 60 years) to cater for all their needs or requirement.

If the population of the dependants is higher than that of the working class, it has the following economic implications.

  •  High taxation: The working population will be made to pay higher amount of tax to take care of the dependants.

  •  Increase in prices: The prices of goods and services will rise as a result of an increase in demand by the dependant  population.

  • Increase in government expenditure: The larger the group of dependants, the greater the expenditure on health services and others by the government.

  • Low savings: When the proportion of the children and the aged (dependants) is large, less income is saved as more of the income is spent in catering for the dependants.

  • Low investment: In a situation where the working class spends all they have to cater for the dependants, there will be little or nothing to save and when there are no savings, little or no investments are made.

  • Fall in standard of living: A high level of dependants reduces savings and income per capital is generally low and this leads to low standard of living.

  • Increase in demand for goods and services: When the number of dependants is higher than those working, there will be an increase in the demand by the dependants on goods and services.

  • Increase in imports: When the demands by children and the aged are not met, there will be an increase in the importation of children and the aged goods and services.

  • Decrease in exports: Goods and services produced within the country are not enough for the dependants hence exports of goods is made practically impossible.

  • Low supply of labour: Since the percentage of the working population is relatively low, it then suggests that there would be a relatively low supply of labour. In summary, the effects of high depending ratio include:

  • Excessive pressure on the resources of the working population.
  • Reduction of saving and investment

  • Low national income and reduced standard of living
  • Shortage of goods and services i.e. excess demand.

  • Reduced tax revenue and therefore the possibility of increased national debt.

  • Retardation of economic growth and development
  • Reduced efficiency and low productivity
  • High level of imports.

  • High taxation
  • Increased government expenditure
  • Love exports

  • Increased cost of living
  • Increased demand for commodities consumed by the young and the aged.

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