What is a demographic dividend ? A very simple and intuitive way of understanding it is thinking why a restaurant would prefer to be located in a crowded downtown area rather than in a sparsely populated area. More people means more customers which means more revenue. Ultimately, people consume and produce, they are the cornerstones of a productive, expanding economy. And young people (especially if healthy and educated) produce and consume more.
India has been predicted by many to reap the rewards of a demographic dividend in the coming years as,
fertility decline leads to reduction in the number of children and increases the ratio of workers to non-workers for a few decades.
The key parameter is the ratio of non-working age population to the working population,
Demographic Ratio = Number of non workers/Number of workers
So the lower the ratio the greater the demographic dividend. The demographic dividend is particularly marked if the nation chooses to invest in skills and the working population can produce a wide range of products and services on a large scale. India faces significant challenges in this area, mainly on account of its sub par and limited education system.
But in her paper “The Other Half of the Demographic Dividend“, Sonalde Desai argues that there is a far more potent structural factor that can prevent India from realizing its demographic dividend. Sonalde identifies the status of women in the workplace and in society as key factors that will significantly inhibit women from contributing to the pool of productive workers in India. This would increase the demographic ratio and significantly diminish the demographic dividend. She uses striking comparisons with China to bring this out. The following table summarizes the ‘naive’ demographic ratio for India and China computed using the simple formula given above,
Year India China
2001 0.55 0.39
2030 0.48 0.50
However, Desai adds to the mix, the ILO statistics on the participation of women in the labour force given by the work participation ratio (WPR),
Nation India China
Able women working (WPR) 38.4% 68.9%
An Indian woman in the working age is about half as likely to be doing economically productive work as her Chinese counterpart. Thus, a huge chunk of the productive population is rendered ineffective with substantial negative implications for the broader economy. Taking into account these actual rates of women’s work participation, Dr. Desai arrives at the following corrected demographic ratios,
Year India China
2030 1.26 0.89
India thus might not realize its full demographic dividend, and might continue to have a smaller proportion of productive workers than China.
These calculations naturally lead one to ask why the work participation rates of Indian women are so low. A wide range of social and institutional factors seem to be responsible. Data and trends show that highly educated women from the highest quintile subset of the Indian economy (WPR: 23 %) are far less likely to work than women from poor rural families with no education (WPR: 81 %). Desai points out,
education in India appears to be associated with lower rather than higher WPRs.
Desai also points out two critical factors for this rather surprising trend,
The absence of skilled work preferred by educated women may be partially responsible for this negative relationhsip. …. gender discrimination in earnings may also play a role in reducing female employment.
Indeed, women in India earn 53 paise for every 100 paise earned by a male in the private sector and 73 paise in the public sector. I would add to this the lack of safety for women in public spaces in urban areas, something that inhibits women from working certain sets of jobs and night shifts.
If India is to realize its demographic dividend, then along with a strong push for skill development in the youth, a comprehensive policy for encouraging job opportunities for women and ensuring income parity and safety seem to be essential. Or Indian men will be left holding up only half the sky.