peak value, 0.94, in 1965 then declined to its minimum, 0.67, in 2010 and is projected to rise again to a new peak, 0.85, in 2037.
To explain this trend it is useful to examine the two components of the ADR: the old age dependency ratio (OADR, population 65+/population 20–64) and the young age dependency ratio (YADR, population <20/ population 20–64). As seen in Figure 3-13, these two components show very different trajectories over time. The YADR peak in 1965 was responsible for the first peak in the ADR, and the future rise in the OADR is responsible for the projected second peak in the ADR in the 2030s. As a result of these opposing trends in the OADR and YADR, the composition of dependents shifts from mostly under age 20 in the 1960s to nearly even between old and young dependents in 2050.
Although widely used, this ratio has a key flaw: It implicitly assumes that all people aged under 20 and over 64 are “dependents” and that all people aged 20–64 are “working.” These assumptions are at best an approximation of reality, and the quality of this approximation changes over time both because of changes in actual economic behavior and because of changes in underlying health.
Retiree to Worker Ratio
The retiree/worker ratio (RWR) can be considered an improved version of the old age dependency ratio. The numerator of the RWR consists of the number of retirees (instead of the population 65+) and its denominator consists of all people in the labor force (instead of the population aged 20–64). The RWR typically exceeds the OADR by a small amount because the number of retirees exceeds the population aged 65+ and because the number of workers is somewhat smaller than the population aged 20–64. The trends over time in the two indicators are similar, as shown in Figure 3-13, where the dashed line represents the RWR.
Support ratios differ from dependency ratios in that the supporters (or workers) are in the numerator and the dependents (or consumers) are in the denominator; these measures are therefore inversely related to dependency ratios. The simplest support ratio is the proportion of the population that is working. The numerator consists of everyone in the labor force5 and the denominator equals the entire population, all of whom are consumers. The