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BOK Working Paper No.2017-28, Changes in the Korean Industry Structure due to Its Population Aging

Economic Research Institute (+82-2-3705-6368) 2017.08.02 7328

Title : Changes in the Korean Industry Structure due to Its Population Aging

Author : Jong Ku Kang(BOK)


This paper analyzes the effects of the population aging on the future industry structure in Korea, using the coefficients of estimation with the OECD country panel data and the forecast of Korean population by Statistics Korea. 

The result reveals that the Korean industry structure, both in terms of value added production and employment, is greatly influenced by the future change in its population, such as population aging and declining working age population and total population. First, the Korean population structure change is expected to bring about a decrease in the share of the manufacturing sector, centering on the low skilled manufacturing sector, while an increase in the service sector, especially in the business activity sector and the health and social work sector. Second, due to the change in the population structure, the productivity of the manufacturing sector, relative to that of the whole industry, tends to fall, while that of the service sector rises. Third, the ratio of export to value added production in most manufacturing sectors rises along with the change in the population structure.

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