Fertility declines in a population combined with falls in mortality rates—the so-called "demographic transition"—produce a typical sequence of effects on age structures. The child-dependency ratio (the ratio of children to those who support them) at first rises somewhat due to more children surviving, then falls sharply as average family size decreases. Later, the overall population ages rapidly, as currently seen in many developed and rapidly developing nations. Between these two periods is a long interval of favorable age distributions, known as the "demographic gift," with low and falling total dependency ratios (including both children and aged persons).
The term was used by David Bloom and Jeffrey Williamson to signify the economic benefits of a high ratio of working-age to dependent population during the demographic transition. Bloom et al. introduced the term demographic dividend to emphasize the idea that the effect is not automatic but must be earned by the presence of suitable economic policies that allow a relatively large workforce to be productively employed.
The term has also been used by the Middle East Youth Initiative to describe the current youth bulge in the Middle East and North Africa in which 15-29 year olds comprise around 30% of the total population. It is believed that, through educational and employment, the current youth population in the Middle East could fuel economic growth and development as young East Asians were able to for the Asian Tigers.