Gender Dividend in Demographic Dividend

Manasa Poovayil

September 07, 2022 | 6 mins

thumbnail for Gender Dividend in Demographic Dividend

“If a window of opportunity appears, don’t pull down the shade” - Tom Peters

Every once in a while, an opportunity arises for an economy to turn the tides in its favor. Efficient utilization of this opportunity means progress and prosperity in leaps and bounds for the economy. One such window is the demographic transition - a period in which the age structure of a population changes to be highly favorable for development.

Demographic Dividend In A Nutshell

Let’s say your grandparents’ generation had an average of three kids. The resources and assets they had were entirely tied up in bringing up these three children, leaving hardly anything for their development. The average expenditure on the development of each child would also be lower. Now, the average number of kids in your parents’ generation had reduced to two. Your parents had a better life compared to your grandparents as the number of dependents was lesser; the stress on their assets was lesser. In the long run, they were able to utilize a little more of what they earned than your grandparents did, and they generated and saved more wealth. You, as one of the children, enjoyed more investment for your development. Now let’s say that the number of kids your generation produced on average reduced even further, down to one. Your wealth has been freed up even more for saving, wealth generation, and other developmental activities. You get the picture.

Essentially, demographic dividends are reapings of accelerated economic growth in a country where there is a decline in fertility and mortality rates. With lesser dependents, there is an increase in the productive labor force. The economy’s resources are more efficiently utilized to accelerate the growth of the populace. As the number of children reduces, higher investments can be made per child, making them more capable and qualified by the time they enter the labor force.

This period generally lasts for around 4 decades, after which an aging population translates to reduced growth in the labor force. Per capita income then takes a downturn. There is an upside, a second dividend, if you will, to this phase. The older working population invests intending to accumulate wealth for retirement, adding to the national income.

But demographic dividends are not the given outcome of a demographic transition. It's an opportunity. And like any other opportunity, it needs to be tapped for benefits. Rightly timed government policies and an aware populace are paramount for greater dividends.

India’s transition: A Boon Or A Challenge?

India’s fertility rate is down to 2.0, the median age is up from 24 to 29 and is predicted to go up to 36 by 2036, and the dependency ratio is down from 65% to 54% - we are in the middle of a transition.

These trends are headed in the right direction and can indicate good times for a nation if the government can keep up with such a transition. If the country is unable to produce enough jobs to match the working-age population, this transition could spell trouble.

Countries like the Republic of Korea, Singapore, and Taiwan have already demonstrated how to best use the transition phase. India needs to up its investment in education, gender equality, and health.

This year, there was an increase of 11.86%, from the previous year, in the budget allocated for education. But it is still less than 3.5% of GDP.

The gender budget is less than 5% of the total expenditure and less than 1% of the GDP.

Why focus on Gender Parity?

There is a strong connection between economic growth during the transition and gender development. The Republic of Korea demonstrated how demographic dividends could be realized by investing in human capital and promoting participation in the labor force, and how important it is to include women as major beneficiaries of these activities as that section of the society is as yet untapped for their full potential.

With significant investments in family planning, the fertility rate in the Republic of Korea dropped from 7 to 1.1 between 1955 and 2015. Women’s participation in the labor force increased from 28% to 54% in those same years as there was a lesser dependency on them as caregivers for children. Women achieved higher levels of education in these years.

It is necessary to adopt such measures in India as well.

Family planning has been a necessity in India due to the rapidly growing population. To ensure a sustained opportunity, it is pertinent to further reduce our fertility rates. There needs to be a focus on generating awareness, providing the right reproductive health-care options, and giving women autonomy over their bodies.
Gender inequality in education is a big concern, with more access being given to males than females to secondary and higher education. The pandemic made this situation a lot worse where more girls dropped out of education to help their families. More women quit their jobs or moved from full-time to part-time to assume roles of caregivers for the sick, the elderly, and the children.
It is important to focus on stimulating women’s participation in the workforce. Our economy was already declining before the pandemic. India would only have a shot at growth if the women of this country are enabled to actively contribute to the labor force.

It is imperative to give equal importance to the development of the female population of a country to enjoy growth and prosperity in the long run.

Sources: