Changing Industrial Structure and Economic Activity of Older Males in Korea: 1980-2000

Abstract

This article examines how long-term changes in the industrial structure in Korea affected the economic activity of older males. The structural shift in industry between 1980 and 2000 greatly lowered the average labor market survival rate, a measure of employment stability, for male workers aged 55 and older. In particular, the relative decline of the agricultural sector fully explains the observed impact of the sectoral shift on the employment of the elderly. The labor force participation rate of older men would have been much higher if the percentage of the labor force employed in agriculture had remained unchanged since 1980. It is estimated that the shrinkage of agriculture explains 84% of the actual decline in the labor force participation rate of men aged 55 to 69 between 1985 and 2000. These results suggest that changing industrial structure, especially the decline in agriculture, could produce a further decline in the labor market activity of older men in the near future. It also points out the limitations of the recent government labor-market policies to boost the employment of older workers, because it is highly difficult, and sometimes undesirable, to alter the course of long-term structural economic changes that diminish the economic activity of the elderly.