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Issue Report

Collection of full-length papers and in-depth analysis of economic and management issues.

Korea's Rapid Population Aging: Impact and Policy Suggestions

Korea's Rapid Population Aging: Impact and Policy Suggestions

CHOI Sook-Hee

Jan. 31, 2008

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ABSTRACT

Korea is the fastest aging nation in the world - and the pace shows no signs of changing soon. Within the next 10 years, it is set to progress from its current “aging society” classification (7% of population aged 65 or older) to “aged” one, when the national population is expected to peak at 49.34 million. And in 2026, Korean society will become “super aged.” At each stage, the share of the population aged 65 or older will progress to 14.3% in 2018 and then 20.8% in 2026. Barring a major reversal, 38% of the population will be senior citizens in 2050. No nation in the past or in the projected future will have aged as fast as Korea.

Presently, the Korean government is busy with countermeasures aimed at boosting the fertility rate up to at least the average OECD level of 1.6 by 2020. To achieve goals of major programs adopted in 2005 and 2006, the government earmarked about 32 trillion won for 2006 through 2010. However, there is no quick panacea.

Obviously, the rapidly aging population raises a host of fundamental concerns about the economic future of Korea. This paper looks at the economic impact of the population aging and what the private and public sectors should do to buffer against the negative effects. Particular attention is paid on labor policies and public retirement plans and health care.

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