The effects of population aging on South Korea’s economy: The National Transfer Accounts approach

This study examines how two factors of population aging, changes in fertility and mortality, will respectively affect South Korea’s economic future. The economic effects of population aging are examined by considering the population in each age group under alternative demographic scenarios. Utilizing recent population projections and South Korea’s National Transfer Accounts, the paper applies a simple decomposition model measuring the respective effects of fertility and mortality on separate aspects of the economy: labor income, private and public consumption, and public and private transfers. The results show that the effects of low fertility and low mortality on the economy are very different in direction, magnitude, timing, and impact by age group. The only effect of an aging population that is the same in all circumstances is the effect on the public pension system: low fertility and mortality will increase pressure on the public pension system of South Korea.

Leave a Comment

Your email address will not be published. Required fields are marked *

The University of Hawaii Economic Research Organization (UHERO) welcomes online comments to stories that are posted on our website or social media pages. Comments are intended to be a forum for open, respectful, and family-friendly discussion. UHERO reserves the right to remove anything posted on our website or social media pages that is deemed inappropriate. All comments are moderated and will therefore have a delayed post time.
Some guidelines (not an exhaustive list) we use when moderating/approving comments include:

  • Do not bully, intimidate, or harass any user.
  • Do not post content that is hateful, threatening or wildly off-topic; or do anything unlawful, malicious, discriminatory or defamatory.
  • Observe confidentiality laws at all times.
  • Do not post spam or advertisements.
  • Observe fair use, copyright and disclosure laws.
  • Do not use vulgar language or profanity.

UHERO may amend this policy from time to time.