DIVIDENDS How Age Structure Change Can Benefit Development




The demographic dividend is commonly defined as the accelerated economic growth that can occur as a population age structure matures. This web feature expands the concept of the demographic dividend to four potential sets of benefits, or dividends. In addition to economic growth, it outlines benefits in health, education, and governance and stability.

Among countries with youthful populations, advancing to a more mature age structure increases the likelihood of achieving substantial gains in each of these four sectors. This web feature explains how reaching multiple important benchmarks under each dividend becomes more attainable as countries progress through the demographic transition—the shift from high to low fertility and mortality, which leads to a higher share of the population in the working ages.

As a country’s population matures and reaches specific age-structure thresholds, it becomes more likely than not to achieve the benchmarks under each dividend. With a better understanding of the potential benefits of age structure change across key sectors, advocates and policymakers can generate multisectoral commitment to investments in voluntary family planning and girls’ education in their country.

Health Dividend

Maternal and Child Survival

Maternal and child mortality are core indicators of health and well-being. Despite remarkable improvements in maternal and child health over the last three decades, many pregnant women and children under age 5 die every year of preventable causes.

The United Nations’ Sustainable Development Goal 3 aims to “ensure healthy lives and promote well-being for all at all ages.” The first two targets of this goal focus on improving maternal and child health, including:

Target 3.1: By 2030, reduce the global maternal mortality ratio to less than 70 deaths per 100,000 live births.

Target 3.2: By 2030, end preventable deaths of newborns and children under 5 years of age, with all countries aiming to reduce under-5 mortality to at least as low as 25 deaths per 1,000 live births.

In addition to the catastrophic social and emotional costs, maternal deaths result in significant losses in socioeconomic development. When maternal and child health improve, families, communities, and countries experience multigenerational health and economic benefits. Voluntary family planning services improve maternal and child survival by providing women with the means and information to avoid high-risk pregnancies. Research finds that access to and use of family planning can reduce maternal mortality by 30 percent or more.

Extending the interval between births also improves outcomes for child health and nutrition. In addition, uptake of family planning reduces early childbearing, which is associated with poor health and educational outcomes for children. In turn, improvements in child survival affect preferences about family size. Studies suggest that couples choose to have smaller families when they know that each child has a better chance of surviving. With fewer children to support, parents are better able to invest in their children’s health, education, and well-being.

As women and couples are better able to plan whether, when, and how often to have children, countries tend to transition from high to low fertility and child mortality. As fertility declines and age structure changes, countries become more likely to achieve the health dividend, measured by two key benchmarks for improvements in maternal and child health:

A country becomes more than 50 percent likely to achieve the maternal health benchmark, measured by a reduction in the maternal mortality ratio to 70 deaths per 100,000 live births, when the median age of the population reaches 26 years.

A country becomes more than 50 percent likely to achieve the child health benchmark, measured by a mortality rate of children under age 5 less than or equal to 25 deaths per 1,000 live births, when the median age of the population reaches 27 years.

Let’s explore a country’s likelihood of achieving the health dividend benchmarks.

Percent Likelihood of Achieving Maternal and Child Health Benchmarks by Median Age In:

SELECT COUNTRY

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    Maternal Health
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    Child Health

Country:

Year:

TFR:

Median Age:

Percent Likelihood:

MEDIAN AGE

To get started, select a country from the dropdown menu.

The bottom axis (X-axis) shows the median age of the population.

The left axis (Y-axis) shows the percent likelihood of achieving the child survival dividend.

The curved line that we see on the graph was generated statistically using historical data from countries that have achieved the child survival dividend. Each point on the curve shows the year, the total fertility rate in that year, the median age of the population in that year, and the percent likelihood of achieving the child survival dividend by that year. The likelihood of achieving the child survival dividend (measured as a percentage) is based on the median age. As the curve rises, the median age of the population increases and ’s likelihood of achieving the child survival dividend is greater.

When we hover over 2015, we see that the TFR in is , the median age is years and the likelihood of achieving the child survival dividend is percent.

In 2030, we see that the TFR is , median age is and the percent likelihood of achieving the child survival dividend has increased to percent.

By 2050, ’s TFR is , the median age is years and the likelihood that it will achieve the child survival dividend is percent. In other words, once the median age reaches years, is percent likely to achieve the child survival dividend.

's likelihood of achieving the child survival dividend is possible only if the country’s total fertility rate (TFR), or the average number of children a woman would have in her lifetime, continues to decline. Accordingly, a faster decrease in the TFR could accelerate ’s progress toward the child survival dividend.

Education Dividend

Educational Enrollment and Attainment

Education is one of the most powerful and proven vehicles for sustainable development and is central to realizing the Sustainable Development Goals.

When both boys and girls have access to education, accelerated economic growth is possible. Secondary education—especially for girls—helps delay marriage and first pregnancy. Women with higher levels of education are also more likely to work outside the home—increasing the size of the wage-earning labor force and the potential for economic development.

Improving secondary school enrollment gives young people the skills to join a competitive global workforce and accelerates progress toward the educational attainment dividend.

A country becomes more than 50 percent likely to achieve late secondary school enrollment rates at or above 60 percent when the median age of the population reaches 25 years.

Advancing from educational enrollment to attainment becomes likely later in the age-structure transition: A country becomes more than 50 percent likely to achieve late secondary attainment rates at or above 60 percent among young adults at a median age of 31 years.

Let’s explore a country’s likelihood of achieving the education dividend benchmarks.

Percent Likelihood of Achieving Enrollment and Attainment Benchmarks by Median Age In:

SELECT COUNTRY

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    Late Secondary Enrollment
  • Show
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    Late Secondary Educational Attainment

Country:

Year:

TFR:

Median Age:

Percent Likelihood:

MEDIAN AGE

To get started, select a country from the drop down menu.

The bottom axis (X-axis) shows the median age of the population.

The left axis (Y-axis) shows the percent likelihood of achieving the education dividend.

The curved lines that we see on the graph were generated statistically using historical data from countries that have achieved the education dividend. There are two curved lines, one for achieving late secondary enrollment rates at or above 60 percent and the other one achieving late secondary attainment rates above 60 percent. Each point on the curve shows the year, the total fertility rate in that year, the median age of the population in that year, and the percent likelihood of achieving the education dividend by that year. As the curve rises, the median age of the population increases and ’s likelihood of achieving the education dividend is greater.

When we hover over 2015 on the Educational Enrollment curve, we see that the TFR in is , the median age is years, and the likelihood of achieving the education dividend is percent.

In 2030, we see that the TFR is , the median age is and the percent likelihood of achieving the education dividend has increased to percent.

By 2050, ’s TFR is , the median age is years and the likelihood that it will achieve the education dividend is percent. In other words, once the median age reaches years, is percent likely to achieve the education dividend.

's likelihood of achieving the education dividend is possible only if the country’s total fertility rate (TFR), or the average number of children a woman would have in her lifetime, continues to decline. Accordingly, a faster decrease in the TFR could accelerate ’s progress toward the education dividend.

Economy Dividend

Income Per Capita and Economic Transformation

A healthy and educated population generates a productive labor force that contributes directly to increased wealth and poverty reduction, yielding benefits for income per capita and economic transformation.

When governments implement sound economic policies that attract foreign investment, grow the manufacturing and service sectors, and meet the employment needs of a growing labor force, it provides a solid foundation for rapid economic growth. When the ratio of the working-age population to the nonworking-age population increases and is coupled with strategic investments that stimulate the economy, countries are increasingly likely to earn upper-middle income status. The transition in a country’s age structure can also facilitate a decline in the share of the population living in poverty.

Although countries may reach lower-middle income status, defined as a GNI (or gross national income) per capita between $1,026 and $4,035, early in the age-structure transition, realizing the benchmark of attaining upper-middle income status, defined as a GNI per capita between $4,036 and $12,475, becomes more than 50 percent likely much later in the age-structure transition: at a median age of 30 years.

The poverty rate declines later in the transition. A country becomes more than 50 percent likely to achieve the poverty reduction benchmark―defined as a poverty rate of 12 percent or fewer of the population living on less than $5.00 per day―when the median age of the population reaches 34 years.

Let’s explore a country’s likelihood of achieving the economy dividend. First, we’ll look at the income and poverty benchmarks.

Percent Likelihood of Achieving Income and Poverty Benchmarks by Median Age In:

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    LOWER-MIDDLE INCOME
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    UPPER-MIDDLE INCOME
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    Poverty Rate

Country:

Year:

TFR:

Median Age:

Percent Likelihood:

MEDIAN AGE

To get started, select a country from the drop down menu.

The bottom axis (X-axis) shows the median age of the population.

The left axis (Y-axis) shows the percent likelihood of achieving the income per capita dividend.

The curved lines that we see on the graph were generated statistically using historical data from countries that have achieved the income per capita dividend. There are two curved lines: one for attaining lower middle-income status and the other for attaining the income per capita dividend of upper-middle income status. Each point on the curve shows the year, the total fertility rate in that year, the median age of the population in that year, and the percent likelihood of achieving the income per capita dividend by that year. The likelihood of achieving the income per capita dividend (measured as a percentage) is based on the median age. As the curve rises, the median age of the population increases and ’s likelihood of achieving the income per capita dividend is greater.

When we hover over 2015, we see that the TFR in is , the median age is years, and the likelihood of achieving the income per capita dividend is percent.

In 2030, we see that the TFR is , the median age is and the percent likelihood of achieving the income per capita dividend has increased to percent.

By 2050, ’s TFR is , the median age is years and the likelihood that it will achieve the income per capita dividend is percent. In other words, once the median age reaches years, is percent likely to achieve the income per capita dividend.

’s likelihood of achieving the income per capita dividend is possible only if the country’s total fertility rate (TFR), or the average number of children a woman would have in her lifetime, continues to decline. Accordingly, a faster decrease in the TFR could accelerate ’s progress toward the income per capita dividend.

Structural shifts in the economy from low- to high-productivity employment—typically from agriculture (primarily subsistence agriculture) to industry and services and from informal to formal employment—can drive economic development. Changes in population age structure can facilitate this shift towards a more productive and competitive labor force.

As median age increases and households are better able to invest in the health and education of each child, the human capital of the future workforce grows. This accumulation of human capital can accelerate the shift to an economy in which employment is increasingly concentrated in higher-income jobs in industry, services, or technology, rather than agriculture.

Population age structure change and the corresponding improvements in human capital can also lead to a more equal share of men and women participating in the workforce, a concept known as economic gender parity. As fertility declines, more women have the opportunity to stay in school, build skills for the formal labor market, and increase their earnings.

Both the structural shift in the economy and increased female participation in the workforce can contribute to increases in income and rapid economic growth.

A country becomes more than 50 percent likely to achieve the economic transformation benchmark—defined as an employment threshold with 20 percent or fewer of the population employed in agriculture—when the median age of the population reaches 30 years.

A country becomes more than 50 percent likely to achieve the economic gender parity benchmark—defined as having at least 9 women for every 10 men in the professional workforce (a ratio of 0.9 or higher)—when the median age of the population reaches 33 years.

Percent Likelihood of Achieving Economic Transformation and Economic Gender Parity Benchmarks by Median Age In:

SELECT COUNTRY

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    Non-agricultural employment
  • Show
    Hide
    Economic Gender Parity

Country:

Year:

TFR:

Median Age:

Percent Likelihood:

MEDIAN AGE

To get started, select a country from the drop down menu.

The bottom axis (X-axis) shows the median age of the population.

The left axis (Y-axis) shows the percent likelihood of achieving the income per capita dividend.

The curved lines that we see on the graph were generated statistically using historical data from countries that have achieved the income per capita dividend. There are two curved lines: one for attaining lower middle-income status and the other for attaining the income per capita dividend of upper-middle income status. Each point on the curve shows the year, the total fertility rate in that year, the median age of the population in that year, and the percent likelihood of achieving the income per capita dividend by that year. The likelihood of achieving the income per capita dividend (measured as a percentage) is based on the median age. As the curve rises, the median age of the population increases and ’s likelihood of achieving the income per capita dividend is greater.

When we hover over 2015, we see that the TFR in is , the median age is years, and the likelihood of achieving the income per capita dividend is percent.

In 2030, we see that the TFR is , the median age is and the percent likelihood of achieving the income per capita dividend has increased to percent.

By 2050, ’s TFR is , the median age is years and the likelihood that it will achieve the income per capita dividend is percent. In other words, once the median age reaches years, is percent likely to achieve the income per capita dividend.

’s likelihood of achieving the income per capita dividend is possible only if the country’s total fertility rate (TFR), or the average number of children a woman would have in her lifetime, continues to decline. Accordingly, a faster decrease in the TFR could accelerate ’s progress toward the income per capita dividend.

Governance and Stability Dividend

Government Effectiveness, Citizen Engagement, Control of Corruption, and Political Stability

Countries with a youthful age structure are at increased risk of conflict and instability, and face significant challenges building robust and effective institutions and fostering citizen participation. Sustainable Development Goal 16 aims to foster “peaceful and inclusive societies” and ensure access to “effective, accountable, and inclusive institutions.” Attaining a more mature age structure increases a country’s likelihood of effective governance and political stability.

Research suggests that declines in fertility and the resulting shifts in age structure can influence several key dimensions of governance. While the causal linkages between age structure and governance require further research, some potential pathways are explored below.

Smaller family size allows parents and governments to increase investment in health and education. A healthier and better educated population tends to contribute to more effective government institutions and services, and increased civic participation.

In addition, in large youthful populations, tensions within the population, high unemployment and underemployment, and rapid rural emigration can increase the risk of violent conflict, insecurity, and corruption.

As fertility declines and median age increases, a country becomes more likely to perform above average in key measures of good governance:

Countries become more than 50 percent likely to achieve the citizen voice and accountability (or “citizen participation”) benchmark—defined as above-average performance in citizen participation in selecting the government, freedom of expression and association, and a free media—when the median age of the population reaches 30 years.

Countries become more than 50 percent likely to achieve the government effectiveness benchmark—defined as above-average performance in the quality of public services, the civil service, policy formulation, and policy implementation—when the median age of the population reaches 32 years.

Countries become more than 50 percent likely to achieve the control of corruption benchmark—defined as above-average performance of the state in serving public, rather than private, interests—when the median age of the population reaches 34 years.

Let’s explore a country’s likelihood of achieving the governance and stability dividend. First, we’ll look at the governance benchmarks for citizen participation, government effectiveness, and control of corruption.

Percent Likelihood of Achieving Governance Benchmarks by Median Age In:

SELECT COUNTRY

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    Citizen participation
  • Show
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    Government effectiveness
  • Show
    Hide
    Control of corruption

Country:

Year:

TFR:

Median Age:

Percent Likelihood:

MEDIAN AGE

To get started, select a country from the drop down menu.

The bottom axis (X-axis) shows the median age of the population.

The left axis (Y-axis) shows the percent likelihood of achieving the political stability dividend.

The curved line that we see on the graph was generated statistically using historical data from countries that have achieved the political stability dividend. Each point on the curve shows the year, the total fertility rate in that year, the median age of the population in that year, and the percent likelihood of achieving the political stability dividend by that year. The likelihood of achieving the political stability dividend (measured as a percentage) is based on the median age. As the curve rises, the median age of the population increases and ’s likelihood of achieving the political stability dividend is greater.

When we hover over 2015, we see that the TFR in is , the median age is years, and the likelihood of achieving the political stability dividend is percent.

In 2030, we see that the TFR is , the median age is and the percent likelihood of achieving the political stability dividend has increased to percent.

By 2050, ’s TFR is , the median age is years and the likelihood that it will achieve the political stability dividend is percent. In other words, once the median age reaches years, is percent likely to achieve the political stability dividend.

’s likelihood of achieving the political stability dividend is possible only if the country’s total fertility rate (TFR), or the average number of children a woman would have in her lifetime, continues to decline. Accordingly, a faster decrease in the TFR could accelerate ’s progress toward the political stability dividend.

Population age structure is further associated with achieving and sustaining liberal democracy, a system of governance that comprises free and fair elections, free association and freedom of expression, equality before the law, and judicial and legislative constraints on the executive branch of government.

As the median age of the population increases, stability and economic prosperity tend to improve. These improvements can catalyze citizens’ increased political agency and participation and foster conditions conducive to democracy. Research further suggests that countries with youthful population age structures may introduce democracy or democratic reforms, but experience challenges in sustaining it.

Countries become more than 50 percent likely to achieve the liberal democracy benchmark—defined as above-average performance on the liberal democracy index—when the median age of the population reaches 26 years.

Let’s explore a country’s likelihood of achieving liberal democracy.

Percent Likelihood of Achieving Liberal Democracy Benchmark by Median Age In:

SELECT COUNTRY

  • LIBERAL DEMOCRACY

Country:

Year:

TFR:

Median Age:

Percent Likelihood:

MEDIAN AGE

To get started, select a country from the drop down menu.

The bottom axis (X-axis) shows the median age of the population.

The left axis (Y-axis) shows the percent likelihood of achieving the political stability dividend.

The curved line that we see on the graph was generated statistically using historical data from countries that have achieved the political stability dividend. Each point on the curve shows the year, the total fertility rate in that year, the median age of the population in that year, and the percent likelihood of achieving the political stability dividend by that year. The likelihood of achieving the political stability dividend (measured as a percentage) is based on the median age. As the curve rises, the median age of the population increases and ’s likelihood of achieving the political stability dividend is greater.

When we hover over 2015, we see that the TFR in is , the median age is years, and the likelihood of achieving the political stability dividend is percent.

In 2030, we see that the TFR is , the median age is and the percent likelihood of achieving the political stability dividend has increased to percent.

By 2050, ’s TFR is , the median age is years and the likelihood that it will achieve the political stability dividend is percent. In other words, once the median age reaches years, is percent likely to achieve the political stability dividend.

’s likelihood of achieving the political stability dividend is possible only if the country’s total fertility rate (TFR), or the average number of children a woman would have in her lifetime, continues to decline. Accordingly, a faster decrease in the TFR could accelerate ’s progress toward the political stability dividend.

Finally, a maturing population age structure is also linked to improved political stability, including a reduced risk of politically motivated violence.

Studies show that youthful populations are more susceptible to violence and civil unrest, particularly where high rates of poverty and unemployment exist. In particular, numerous studies have concluded that countries with a youthful age structure are more likely to experience revolutionary conflict aimed at overthrowing the government.

A country becomes more than 50 percent likely to achieve the political stability benchmark—defined as above-average performance in the risk of politically motivated violence and instability—when the median age of the population reaches 33 years.

Percent Likelihood of Achieving Political Stability Benchmark by Median Age In:

SELECT COUNTRY

  • Political Stability

Country:

Year:

TFR:

Median Age:

Percent Likelihood:

MEDIAN AGE

To get started, select a country from the drop down menu.

The bottom axis (X-axis) shows the median age of the population.

The left axis (Y-axis) shows the percent likelihood of achieving the political stability dividend.

The curved line that we see on the graph was generated statistically using historical data from countries that have achieved the political stability dividend. Each point on the curve shows the year, the total fertility rate in that year, the median age of the population in that year, and the percent likelihood of achieving the political stability dividend by that year. The likelihood of achieving the political stability dividend (measured as a percentage) is based on the median age. As the curve rises, the median age of the population increases and ’s likelihood of achieving the political stability dividend is greater.

When we hover over 2015, we see that the TFR in is , the median age is years, and the likelihood of achieving the political stability dividend is percent.

In 2030, we see that the TFR is , the median age is and the percent likelihood of achieving the political stability dividend has increased to percent.

By 2050, ’s TFR is , the median age is years and the likelihood that it will achieve the political stability dividend is percent. In other words, once the median age reaches years, is percent likely to achieve the political stability dividend.

’s likelihood of achieving the political stability dividend is possible only if the country’s total fertility rate (TFR), or the average number of children a woman would have in her lifetime, continues to decline. Accordingly, a faster decrease in the TFR could accelerate ’s progress toward the political stability dividend.

Moving Forward

Progress through a demographic transition, when a country moves from high birth and death rates to lower birth and death rates, and the resulting change in population age structure is essential to achieving any of the benchmarks under each of the four dividends. Where youthful populations persist, the large size of the young population relative to the working-age population is likely to delay all four dividends.

Countries can increase their likelihood of achieving these dividends by ensuring all women and couples are able to freely choose whether, when, and how often to have children. Despite recent advances in expanding access to voluntary family planning, 218 million women of reproductive age in low- and middle-income countries would like to prevent, delay, or avoid pregnancy but are not using modern contraception.

Investment in voluntary family planning information and services supports women and girls to make informed, full, and free choices about using contraception and having children. This analysis underscores that such investment can also help countries achieve policy goals that advance the well-being of their populations for generations to come.

EDUCATION
HEALTH
Governance and Stability
ECONOMY