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Population aging in Korea: Importance of elderly workers

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  • Lee, Jaejoon

Abstract

Korea's population is aging at a faster pace than any other major country, and the adverse impact of this trend on the economy is predicted to be significant. This paper focuses on the macroeconomic effects of population aging with particular attention paid to the pace of aging in Korea. According to our analysis, it is difficult to offset the decline in the labor supply driven by rapid population aging, even if the labor force participation rate of the working-age population rises to a significantly high level. We suggest a re-orientation of policy directions to correspond to the behavioral changes of economic agents. Policies must focus on promoting labor force participation among the elderly while pushing towards human capital advancement and higher productivity.

Suggested Citation

  • Lee, Jaejoon, 2023. "Population aging in Korea: Importance of elderly workers," KDI Journal of Economic Policy, Korea Development Institute (KDI), vol. 45(2), pages 51-69.
    • Handle: RePEc:zbw:kdijep:273450
    DOI: 10.23895/kdijep.2023.45.2.51
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    References listed on IDEAS

    as
    1. Lee, R., 2016. "Macroeconomics, Aging, and Growth," Handbook of the Economics of Population Aging, in: Piggott, John & Woodland, Alan (ed.), Handbook of the Economics of Population Aging, edition 1, volume 1, chapter 0, pages 59-118, Elsevier.
    2. Rob Clark & Rikiya Matsukura & Naohiro Ogawa, 2013. "Low fertility, human capital, and economic growth," Demographic Research, Max Planck Institute for Demographic Research, Rostock, Germany, vol. 29(32), pages 865-884.
    3. Daron Acemoglu & Pascual Restrepo, 2017. "Secular Stagnation? The Effect of Aging on Economic Growth in the Age of Automation," American Economic Review, American Economic Association, vol. 107(5), pages 174-179, May.
    4. Lee, Jaejoon, 2019. "Population Aging and Economic Growth: Impact and Policy Implications," KDI Policy Forum 273, Korea Development Institute (KDI).
    5. Allen C. Kelley & Robert M. Schmidt, 2007. "A Century of Demographic Change and Economic Growth: The Asian Experience in Regional and Temporal Perspective," Contributions to Economic Analysis, in: Population Change, Labor Markets and Sustainable Growth: Towards a New Economic Paradigm, pages 39-74, Emerald Group Publishing Limited.
    6. Allen Kelley & Robert Schmidt, 1995. "Aggregate population and economic growth correlations: The role of the components of demographic change," Demography, Springer;Population Association of America (PAA), vol. 32(4), pages 543-555, November.
    7. Kelley, Allen C. & Schmidt, Robert M., 1995. "Aggregate Population and Economic Growth Correlations: The Role of the Components of Demographic Change," Working Papers 95-37, Duke University, Department of Economics.
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    More about this item

    Keywords

    Korean Economy; Population Aging; Economic Growth;
    All these keywords.

    JEL classification:

    • J11 - Labor and Demographic Economics - - Demographic Economics - - - Demographic Trends, Macroeconomic Effects, and Forecasts
    • E66 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General Outlook and Conditions

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