The assessments came on the first day of a conference at the Bank of Korea in Seoul, held under the theme of "The Economics of Population Ageing and Longevity: From Challenges to Opportunities."
Several speakers warned that South Korea is going through demographic changes unusually quickly. They said the country has less time than other countries that aged earlier to deal with slower growth, lower interest rates and growing pressure on the pension system.
Fumio Hayashi, a professor emeritus at Japan's National Graduate Institute for Policy Studies, argued that Japan's three decades of stagnation can be explained in significant part by its unusually early population aging.
His analysis showed Japan was not an outlier among mature economies, with faster aging generally associated with weaker growth. Similar pressure could increasingly shift toward East Asia.
Between 2020 and 2050, South Korea's aging pace is projected at 0.96 under Hayashi's measure, more than three times the U.S. figure of 0.31.
Hwang In-do, head of the Financial and Monetary Economic Studies Team at the BOK's Economic Research Institute, said ageing could also reshape the environment for monetary policy.
A BOK study estimated that South Korea's equilibrium real interest rate in 2024 would have been about 1.4 percentage points higher if fertility and life expectancy had remained at their 1991 levels.
Selahattin Imrohoroglu, a professor of finance and business economics at the University of Southern California, said economies such as South Korea and China face an additional challenge because aging began later but is now progressing much faster.
Using the United Nations' low-fertility population scenario, Imrohoroglu estimated South Korea's old-age dependency ratio could approach 200 percent by 2100. That would imply roughly two elderly people for every working-age person.
As a measure of the scale of adjustment, he calculated that South Korea's full retirement age would have to rise by about 24 years by 2100 to keep its old-age dependency ratio at the 2024 level.
Imrohoroglu stressed that the figure was not a policy recommendation. He presented it as a simplified measure to illustrate the scale of demographic adjustment across countries.
"South Korea sits literally at the sharp end of all these three points," Imrohoroglu said, referring to the size of the fiscal adjustment, limited time available and weaker growth capacity.
Even a near-term recovery in fertility would provide little immediate relief to pension finances, he said during a panel discussion.
Additional births would not begin expanding the tax-paying workforce until around 2060, meaning pension reform cannot rely on higher fertility to ease pressures over the next several decades.
Imrohoroglu said South Korea would instead need to use several policy levers at once. He cited gradually extending working lives, increasing labor-force participation and reducing disincentives to remain employed longer.
He also cited Japan's 2004 introduction of a "macroeconomic slide," which adjusts pension benefits according to demographic conditions, as an example South Korea could study.
Hwang Jisoo, an associate professor of economics at Seoul National University, said there is no consensus on a single cause of falling fertility.
She cited housing costs, intensive parenting and changing social values, as well as tensions between women's economic roles and traditional expectations of motherhood
Using nationwide National Health Insurance data, Hwang found that mothers' earnings five years after their first childbirth were 43 percent below the estimated level had they remained childless. Fathers showed little comparable change.
The penalty approached 50 percent among some more recent cohorts even as South Korea's overall gender earnings gap narrowed.
"Parenthood is becoming a more economically stratified experience," Hwang said.
She said women with higher earnings, more secure employment and jobs at large companies or in the public sector have become increasingly more likely to have children. Economic stability is therefore becoming an important factor in who enters parenthood, according to her findings.
Hwang also cautioned against interpreting South Korea's recent fertility rebound as evidence of a structural turnaround.
Some of the increase may reflect marriages delayed during the coronavirus pandemic that took place in 2023 and 2024 and are now resulting in births, she said.
Several more years may be needed to determine whether fertility behavior has fundamentally changed, Hwang added. She said policy should move beyond parental leave toward broader work-family compatibility. That could include flexible schedules and workplace practices that allow both men and women to participate in everyday care.
South Korea's parental leave system is generous on paper, Hwang said, but actual access differs sharply across workplaces, particularly at smaller firms. She also cautioned that policies targeted specifically at women or mothers could unintentionally reinforce gender differences in hiring and employment.
Family and population policies should instead be designed around workers' broader care needs, she said. Smaller employers may also need financial or technological support to make flexible arrangements feasible.
Yum Minchul, associate professor of economics at Virginia Commonwealth University, identified competition over children's education as another factor weighing on fertility.
Yum said spending by higher-income families can create pressure on other households to keep up. His research suggests that this can push private education spending above a socially efficient level and reduce fertility.
A 10-percent decline in private education spending among the top 15 percent of households was associated with about a 0.5 percentage point decline in the education spending share of the bottom half, based on the midpoint estimate presented Wednesday.
A model calibrated to South Korean households found that removing the status-comparison effect entirely would increase completed fertility by 28 percent.
Yum said reducing competition may require changes beyond the private tutoring market.
Greater labor mobility over a worker's career could weaken the tight link between admission to an elite university and lifetime earnings, reducing families' incentive to engage in costly educational competition, he said.
Volker Ziemann, an economist at the Organisation for Economic Co-operation and Development, highlighted another feedback loop involving low fertility and South Korea's concentration of population and economic activity in the Seoul metropolitan area.
Ziemann said higher wages draw young people toward the capital region, while expensive housing and congestion make family formation more difficult.
Population decline outside the capital can then weaken regional economies further and reinforce concentration, according to his analysis.
The OECD estimates South Korea's overall population could fall by around 10 percent by 2050 and its working-age population by more than 35 percent.
The panel ultimately converged on the view that demographic policy should not simply target a predetermined fertility rate.
Hwang said South Koreans want more children than the country's current fertility rate suggests. This shows that some people may be unable to have the families they want because of various barriers.
Hwang and Yum said policymakers should focus on reducing those constraints rather than treating a specific fertility rate as the objective itself.
The discussions highlighted a two-track challenge for Korea. Policymakers can still reduce barriers to family formation, but pensions, labor markets and productivity policies also need to adjust to ageing already embedded in the population structure.
AJP Takeaways
• South Korea faces one of the world's fastest aging transitions, with economists warning that a shrinking workforce could weigh on growth, lower equilibrium interest rates and increase pressure on public pensions.
• Even if South Korea's fertility rate rebounds soon, the pension impact would take decades to materialize, while one estimate showed the retirement age would need to rise by about 24 years by 2100 to keep the current old-age dependency ratio unchanged.
• Seoul National University economist Hwang Jisoo said South Korea's recent fertility rebound may partly reflect marriages delayed during the COVID-19 pandemic, making it too early to call a structural turnaround in birth trends.
• Economists at the BOK-CEPR-OECD conference said Korea should tackle barriers to parenthood — including workplace rigidity, unequal care burdens and intense education competition — while simultaneously reforming pensions and labor markets for ageing already embedded in the population structure.
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