Consumption- and Productivity-Adjusted Dependency Ratio with Household Structure Heterogeneity

This study constructs a new dependency ratio measure by taking into account the consumption needs of the young and elderly people, and the productivity of middle-aged people. Different from the way that Cutler et al. (1990) and Weil (1999) constructed the relative needs by using the average consumptions of each age cohort of people, it estimates the factor of relative needs of people at different ages based on a regression model, which embraces the household age compositions and size in the assessment. The analysis uses household survey data from five developing countries in Asia— Bangladesh, Cambodia, the People’s Republic of China (PRC), Thailand, and Viet Nam.