Republic of Korea: Selected Issues

International Monetary Fund

No 2025/309, IMF Staff Country Reports from International Monetary Fund

Abstract: This Selected Issues paper analyses healthy aging and labor market participation in Korea. Korea is one of the fastest aging countries globally, with the elderly population (65+) rising from 6 percent in the mid-1990s to 20 percent in 2024, and projected to exceed 21 percent by 2026, classifying it as a super-aged society. This rapid aging, driven by high life expectancy (84 years) and a low fertility rate (0.72 in 2023), is straining the labor market due to a declining working-age population. However, healthy aging—improved health and longer life expectancy—has enabled elderly workers to remain active in the labor market, mitigating some adverse effects of aging. Empirical analysis using a two-stage least square approach reveals that better health increases labor force participation and reduces retirement rates among elderly workers, with stronger effects observed in younger age groups, males, and lower income individuals. Policy recommendations include raising the retirement age, reforming wage systems, promoting flexible work arrangements, and enhancing reskilling programs to boost elderly employment and address labor market challenges.

Keywords: labor force participation; staff team; health indicator; labor market participation in Korea; elderly worker; Aging; Labor markets; Labor force participation; Labor force; Asia and Pacific; Global (search for similar items in EconPapers)
Pages: 18
Date: 2025-11-24
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