What is Inactive Population definition/concept

There are many ways to classify the population. It can be by age, by sex, by territory or for levels of study . However, to understand economics, it is important to distinguish the population into two groups : the active and the inactive population. The first is made up of the group of people of working age who have a job and even those who do not work, that is, the unemployed.

On the other hand, the inactive population is formed by those individuals who are outside the official working age and, therefore, cannot carry out a work activity because they are under 16 or over 65 years of age. Thus, the  social groups that make up the inactive population are the following: students, pre-retirees, retirees and those with some permanent disability. On the other hand, the active population includes all those who are occupied with some work activity and the unemployed.

Two Concepts That Can Cause Confusion

If we start from the initial  definition, the active population includes both workers and unemployed people. Therefore, an individual who does not have a job, but who may be, is not part of the inactive population. In this sense, the idea of ​​inactivity applies to anyone who cannot be active because of age or personal circumstances that impede him.

The importance of data on the inactive population

Let’s suppose that in a country there is an active population with 5 million inhabitants and an inactive population with 15 million. In this case, there would be a serious social problem, since of the 20 million that make up the population, only 5 work or can work.

The hypothetical example mentioned above serves to illustrate a general idea: that a country’s economy depends to a large extent on the appropriate proportion between the active and inactive population. Because of this, there is a specific concept to refer to this social group : the PEI or Economically Inactive population.

This large sector of the population cannot work because of age and therefore is not part of any productive sector. This means, in short, that individuals who are within the working population are the taxpayers who pay taxes to pay the benefits of those who belong to the working population (for example, retirement pensions). In other words, the active population is productive and the inactive is dependent.

The dependency ratio is the demographic index that relates both sectors of the population.

So statistical dependence rate establishes a measure that shows the relationship between the sector dependent on society and productive. This index expresses how many minors and elderly there are in relation to the population as a whole.

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