Korea’s Demographic Changes and a Long-term Growth Projection: a General Equilibrium Analysis

Kyooho Kwon

No 2015-26(K), KDI Policy Studies from Korea Development Institute (KDI)

Abstract: This research monograph builds a Overlapping Generations Model to study the effects of Korea's demographic transition on the GDP growth rate in the long-run. The model incorporates the population projection through 2060 by Statistics Korea and the effects of low fertility and rise in life expectancy on the output growth rate are studied. In the model, endogenous responses of female labor are also considered. Under the assumption that the TFP growth rate will be slowed moderately in the future, maintaining 1.3% per annum, the GDP growth rate of the Korean economy is projected to slow down to 1.1% per annum in 2050s from 4.0% in 2000s. The shrinking workforce due to persistently low fertility will play a significant role in the slow-down. The rise in life expectancy will play a mitigating role, but the magnitude of its effect is not large enough to offset the negative effect of the low fertility.

Date: 2015
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:kdipol:v:2015-26(k):y:2015:p:1-75

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