Level of per capita GDP depends upon which of the following? 1. Proportion of population in the working age 2. Work participation rate 3. Per worker productivity Select the correct answer using the code given below.
- (a)3 only
- (b)1 and 3 only
- (c)1 and 2 only
- (d)1, 2 and 3
Correct — D, 1, 2 and 3. This is not a matter of opinion but of arithmetic, and the identity can be written out in one line. Per capita GDP is GDP divided by population. Multiply and divide by the working-age population and again by the number of workers and nothing changes in value, but the expression splits into three factors: the working-age population as a share of total population, the number of workers as a share of the working-age population — which is the work participation rate — and GDP per worker, which is per worker productivity. Every one of the three items in the question is therefore a factor in the product, and if any one of them rises while the other two hold steady, per capita GDP rises with it. That is why a country can have a young population and still a low per capita GDP if few of those people work, or high productivity and still a modest per capita GDP if a large share of the population is too young or too old to work.
- (a)3 only — Productivity is one factor of three. Two economies with identical output per worker will still differ in per capita GDP if one has a larger share of its people of working age, or a higher proportion of them actually in work.
- (b)1 and 3 only — Drops the work participation rate, which is the factor that most distinguishes India from comparable economies. A large working-age population contributes nothing to output if it stays outside the labour force.
- (c)1 and 2 only — Drops productivity, and productivity is the factor that ultimately decides how rich a country becomes. Demography alone cannot raise output per head indefinitely.
Per capita GDP is the standard first measure of a country's average material standard of living, and it can be decomposed into three independent levers. The first is demographic — how large a share of the population falls in the working ages, usually taken as 15 to 64. The second is behavioural and institutional — how many of those people are actually working or seeking work, which the work participation rate measures. The third is technological and organisational — how much output each worker produces, which depends on capital, skills and technology.
Read as a piece of economics this is the demographic dividend argument set out formally. India's advantage lies in the first term, since about two-thirds of its people are of working age, but a dividend is only potential. It converts into higher per capita GDP through the second and third terms — participation and productivity — which is why skilling, education and raising the women's participation rate dominate the policy conversation. A student who has grasped that will also see why 'all three' is a natural answer here rather than a suspicious one. The safest way to handle a question of this shape is to write the identity out on the rough sheet; if a term appears in the product, it belongs in the answer.
- Per capita GDP equals GDP divided by total population.
- It decomposes into the working-age share of population, times the work participation rate, times output per worker.
- The working-age group is conventionally taken as 15 to 64 years.
- A demographic dividend arises from a large working-age share, but only converts into growth if participation and productivity follow.
- Any of the three factors can rise or fall independently of the other two.
The decomposition is an identity, not an argument — every term in the product must appear in the answer.
- Assuming a code question cannot have all three items correct.
- Treating a large young population as sufficient for growth, when participation and productivity have to follow.
- Confusing the working-age share with the total population — a bigger population by itself does not raise output per head.
Asked as a statement-code item where all three options are terms of a single identity, so the test is whether you can write that identity out.
India is regarded as a country with "Demographic Dividend". This is due to
- (a) Its high population in the age group below 15 years
- (b) Its high population in the age group of 15-64 years
- (c) Its high population in the age group above 65 years
- (d) Its high total population
Answer(b) Its high population in the age group of 15-64 years
Item 1 of this CDS question, asked on its own. Note that the UPSC answer rejects 'high total population' — it is the working-age share, not the headcount, that matters, which is exactly why the share appears as a ratio in the decomposition.
To obtain full benefits of demographic dividend, what should India do?
- (a) Promoting skill development
- (b) Introducing more social-security schemes
- (c) Reducing infant mortality rate
- (d) Privatization of higher education
Answer(a) Promoting skill development
Item 3 of this question in policy form. Skilling raises output per worker, which is the third factor in the identity; the UPSC item is really saying that a favourable age structure alone does not deliver per capita growth.
- practice — not a real PYQ
If a country's working-age share of population and its output per worker both stay unchanged but more women enter paid work, per capita GDP will
- (a)fall
- (b)rise
- (c)stay unchanged
- (d)change only if population also grows
Answer(b) rise — the work participation rate is one of the three factors in the product, so raising it alone raises per capita GDP.
- practice — not a real PYQ
The dependency ratio of a country rises when
- (a)the share of the population aged 15 to 64 increases
- (b)the share of the population outside the working ages increases
- (c)labour productivity increases
- (d)the work participation rate increases
Answer(b) the share of the population outside the working ages increases — a higher dependency ratio is the mirror image of a smaller working-age share.