Several related demographic trends are occurring in developing countries: youth comprise a large portion of populations, fertility rates are declining, and urban dwellers are increasing. As fertility rates decline and populations age, the decline in the ratio of young dependents to working age adults is expected to free up household resources, which can be invested in human capital, including youth nutritional wellbeing. We test this hypothesis in a sample of youth (n = 1,934) in Southwestern Ethiopia. Multiple measures of achieved growth and nutritional status are explored (weight, height, mid-upper arm circumference (MUAC), body mass index (BMI) and body mass index for age z-score (BMIZ), weight for age z-score (WAZ), and height for age z-score (HAZ)). In multivariable models controlling for the effects of income, age, gender, and youth workloads, youth living in rural settings had significantly lower weight (1.24 kg lighter), MUAC (0.67 cm lower), BMI (0.45 BMI lower), BMIZ (0.27 lower), HAZ (0.14 HAZ lower), and WAZ (0.3 WAZ lower) than urban youth (all P < 0.01). Compared with youth in the lowest dependency ratio households, results show that youth in households with the highest dependency ratios were estimated to be 1.3 kg lighter, have 0.67 cm smaller MUAC, and BMI that was 0.59 lower (all P<0.01). Similar results were found for WAZ (0.21 lower) and BMIZ (0.36 lower). Youth height and HAZ were not associated with household dependency. These results may point toward increasing levels of human capital investments in Ethiopian youth as fertility levels decline and populations urbanize. Am J Phys Anthropol, 2011. © 2011 Wiley-Liss, Inc.