Migration or stagnation: Aging and economic growth in Korea today, the world tomorrow

Michael Clemens

No WP24-18, Working Paper Series from Peterson Institute for International Economics

Abstract: South Korea faces an unprecedented economic crisis driven by rapid population aging, as it approaches a future of negative economic growth. This paper examines the full range of possible policy responses with the potential to restore dynamism to the Korean economy. Contrary to many prior analyses, the author finds that enhanced labor migration to Korea is necessary, sufficient, and feasible. Migration is necessary because in the best forecasts we have, no other class of policy has the quantitative potential to meaningfully offset aging. Migration is sufficient because enhanced temporary labor migration by itself would offset most of Korea's demographic drag on growth over the next 50 years. And migration is feasible because the levels of migration and timescale of the transition would resemble that already carried out by Malaysia and Australia. Many advanced economies will follow in Korea's demographic footsteps in decades to come, and have much to learn from the decisions that the Korean government makes now.

Keywords: Migration; South Korea; Labor; Demography; Economic Growth; Population Aging (search for similar items in EconPapers)
JEL-codes: F22 J15 K37 (search for similar items in EconPapers)
Date: 2024-07
New Economics Papers: this item is included in nep-age, nep-gro, nep-int, nep-lab, nep-mig, nep-sea and nep-ure
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