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  • P-ISSN 2586-2995
  • E-ISSN 2586-4130
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KDI Journal of Economic Policy. Vol. 48, No. 1, February 2026, pp. 33-62

https://doi.org/10.23895/kdijep.2026.48.1.33

× KDI Open Access is a program of fully open access journals to facilitate the widest possible dissemination of high-quality research. All research articles published in KDI JEP are immediately, permanently and freely available online for everyone to read, download and share in terms of the Creative Commons Attribution 4.0 International License.

Can Healthy Aging Boost the Labor Supply? Evidence from Korea

BERTRAND GRUSS; ERIC HUANG; ANDRESA (Corresponding Author) LAGERBORG; DIAA NOURELDIN; GALIP KEMAL OZHAN

Author & Article History

Manuscript received 05 June 2025; revision received 11 June 2025; accepted 28 October 2025.

Abstract

This paper examines the role of ‘healthy aging’ in boosting labor supply in Korea. First, we use microdata from surveys to assess whether there is evidence that the physical abilities of individuals aged 50 years and above have been improving over successive cohorts. Second, we investigate whether health improvements among older workers influence their labor market outcomes, such as the decision to supply labor or to retire. We use an instrumental variable approach to enable causal inference, proxying exogenous variations in health with the incidence of certain chronic diseases. Our findings reveal that (i) physical health indicators have improved on average across birth cohorts, providing evidence in favor of ‘healthy aging’ in Korea, and (ii) better health increases the probability of participating in the labor force and postponing retirement. Overall, our results suggest that healthy aging increased the labor supply of older individuals in Korea by around 1.9 percentage points per year during the period 2006-20. The results for Korea are qualitatively comparable but quantitatively somewhat stronger than those for comparator Asian countries.

Keywords

Population Aging, Demographic Change, Healthy Aging, Labor Markets

JEL Code

J11, J14, J26

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