Can womenomics solve demographic decline?
May 29, 2019
In his latest column for the Korea Times, Troy Stangarone points to gender equality as a necessity for South Korea to offset the economic consequences of demographic decline.
The demographic decline is in part a story of Korea's success: According to a study in the British medical journal Lancet, a South Korean woman born in 2030 will have a 57 percent chance of living past the age of 90. This would give them the longest expected life span in the world. South Korean men can expect to be among the third-longest living group of men in the world.
However, with fertility rate below the replacement level, South Korea's workforce will shrink and South Korea's economic growth potential will decline to less than 2 percent over the next two decades. In addition, social issues like old age poverty may intensify as the economy faces contractions and contend with demands for higher spending in healthcare. A separate study by Lancet estimates that by 2040 South Korea will need to spend an additional 3 percent of GDP to cover healthcare costs and total healthcare expenditures will rise to 10.1 percent of GDP.
Here, Stangarone sees the integration of more women into the workforce as a way for the country to maintain economic growth. According to a recent study by the International Monetary Fund (IMF), South Korea could add 7 percent to its GDP, in spite of its declining workforce, if female labor participation is able to close the gap with male labor participation by 2035. If the rate of female labor participation were only to continue increasing at the rate of other advanced economies over the same period, South Korea's GDP would grow by 4 percent.
Although it won't completely obviate the effects of the changing demographics, these are not insignificant numbers. A 7 percent increase in GDP is only slightly less than South Korea currently spends on healthcare, according to World Bank data.
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