Employment Policies in an Aging Society: Review of the Experiences of the OECD Countries with Population Aging and Their Policy Responses

In this paper we review the experiences of OECD countries with population aging and their policy responses, and suggest directions and measures of medium and long-term employment policies to cope with population aging in a comprehensive perspective. Specifically, following the policy objective of sustainable economic growth, we systematically classify policy types to cope with population aging and review possibilities and limitations of each policy type, while also considering Korea-specific situations as well as the experiences of other OECD countries. There are two broad types of employment policies to sustain economic growth in an aging society. One is to increase the quantity of labor force and the other is to enhance the quality of labor force. Policies to increase the quantity of labor force include pro-natalist policies, immigration policies, and policies to fully mobilize the labor resources of women and older people. Policies to enhance the quality of labor force include human resource development and flexicurity policies in the labor market. Our review suggests that direct pro-natalist policies seem to be ineffective. Also immigration policies cannot fundamentally solve the problem caused by population aging. Policies to fully mobilize the labor resources of women and older people seem to be the most effective policy. However, labor productivity should be an engine of economic growth in the long run when labor input reaches the limit of its capacity. In conclusion, in the long run, it is most important to enhance the quality of human capital and improve the functioning of the labor market to cope with the challenges of population aging.