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Using the case of Bangladesh, this article critically explores the dynamics of changes in population age structure and their implications for economic development. It argues that the existing literature, though rich and covering a wide range of issues, is highly fragmented. The existing literature either narrowly focuses on population growth vis-à-vis economic growth; concentrates too much on empirical estimation of ‘dividend’; makes justifications for policy interventions; or concentrates on restricted microeconomic models of choice and rationality to understand demographic change. This article attempts to propose a comprehensive framework that stipulates the relations amongst changes in population age structure, demographic transition, and economic development in the contexts of developing countries. Per the proposed framework, Bangladesh is positioned in the intermediate stage of its demographic transition, which is supposed to be marked by a productive phase of ‘demographic dividend’ and could affect economic growth principally through changes in the composition of the labour force, as conditioned by a number of policy variables. Using this framework, the article finds the recent development performance of Bangladesh to be lower than expected, as it has not been able to fully capitalise on advantageous changes in the age structure of its population. This paper also identifies a number of challenges in terms of harnessing economic growth to be more job-intensive in productivity sectors, enhancing quality of labour and formation of skills, and expanding the productive capacity to absorb a growing labour force. All of these have useful implications for other developing countries in similar socio-demographic conditions