Can Healthy Aging Boost Labor Supply? Evidence from Korea

IMF Working Papers, December 12, 2025

Source details

Authors: Bertrand Gruss, Eric Huang, Andresa Helena Lagerborg, Diaa Noureldin, Galip Kemal Ozhan
Published: December 12, 2025
Series: IMF Working Papers
DOI: https://doi.org/10.5089/9798229033381.001

Authors: Bertrand Gruss, Eric Huang, Andresa Helena Lagerborg, Diaa Noureldin, Galip Kemal Ozhan
Date: December 12, 2025
Series: IMF Working Papers, Working Paper No. 2025/260
Pages: 32

Assess whether physical abilities of individuals aged 50 years and above have been improving across successive cohorts in Korea.
Investigate whether health improvements among older workers influence labor market outcomes, including labor force participation and retirement timing.
Empirical strategy: instrumental variable approach to enable causal inference, proxied exogenous variation in health with the incidence of certain chronic diseases.
Data: microdata from surveys (population of interest: individuals aged 50+ in Korea).

Physical health indicators have improved on average across birth cohorts, providing evidence in favor of “healthy aging” in Korea.
Better health increases the probability of participating in the labor force and postponing retirement.
Quantitative impact: healthy aging has increased the labor supply of older individuals in Korea by around 1.9 percentage points per year during the 2006-20 period.
Comparative result: the results for Korea are qualitatively comparable but quantitatively somewhat stronger than those for comparator Asian countries.

Uses microdata from surveys to measure physical abilities and health indicators across cohorts.
Employs an instrumental variable strategy using incidence of certain chronic diseases as instruments for exogenous variation in health.
Analysis focuses on labor market outcomes such as decision to supply labor and decision to retire.

Improvements in older-worker health can meaningfully raise labor force participation and delay retirement, contributing to higher labor supply among the 50+ population.
Observed cohort-based improvements imply that demographic aging accompanied by better health may partly offset labor supply shortfalls associated with population aging.
Cross-country comparisons suggest Korea’s healthy-aging effect on labor supply may be stronger than in some other Asian countries, indicating scope for policy learning and further research on country-specific drivers.

Can Healthy Aging Boost Labor Supply? Evidence from Korea — IMF Working Paper No. 2025/260.