Author: Chulhee Lee(Seoul National Univ.), Jongwoo Chung(Bank of Korea)

This study projects changes in the economically active population (EAP) across cities, counties, and districts in Korea from 2022 to 2042 in order to examine the implications of future demographic shifts for regional labor markets. The projections reveal that demographic change is likely to widen disparities in the EAP across localities at an accelerating pace. Simulation results further indicate that a more balanced distribution of youth migration across regions could mitigate the trend of increasing inequality in the future working-age population. Conversely, the absence of mobility among the older population would exacerbate disparities in regional labor supply. An overall increase in the labor force participation rate, however, appears to exert only limited influence on the trajectory of regional inequality in the EAP. These findings suggest that policies designed to reduce interregional disparities in youth migration while reinforcing differences in older-age migration could serve as effective measures to ease future imbalances in regional labor supply. Enhancing the overall labor force participation rate alone is unlikely to contain the widening gap, underscoring the need for region-specific employment policies tailored to local circumstances.