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On using mandatory retirement to reduce workforce in korea


  • Joonmo Cho
  • Sunwoong Kim


Since the financial crisis in 1998, many Korean corporations with low profitability and excessive liabilities cut operating costs. They had to deal with exorbitant wage increases that outpaced productivity and were generated by the traditional seniority-based wage system. The empirical analysis of this study suggests that those companies with many long tenure workers under the Japanese-style personnel management system are more likely to utilize mandatory retirement in order to adjust employment. Moreover, blue-collar jobs are more likely to be associated with mandatory retirement. This suggests that the labour unions may tacitly approve of this practice.

Suggested Citation

  • Joonmo Cho & Sunwoong Kim, 2005. "On using mandatory retirement to reduce workforce in korea," International Economic Journal, Taylor & Francis Journals, vol. 19(2), pages 283-303.
  • Handle: RePEc:taf:intecj:v:19:y:2005:i:2:p:283-303
    DOI: 10.1080/10168730500080550

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    References listed on IDEAS

    1. Lazear, Edward P, 1979. "Why Is There Mandatory Retirement?," Journal of Political Economy, University of Chicago Press, vol. 87(6), pages 1261-1284, December.
    2. Morley Gunderson & James E. Pesando, 1980. "Eliminating Mandatory Retirement: Economics and Human Rights," Canadian Public Policy, University of Toronto Press, vol. 6(2), pages 352-360, Spring.
    3. Chiang, Sin-Hwan, 1986. "Cost Savings, Wages and the Growth of the Firm," Economic Journal, Royal Economic Society, vol. 96(383), pages 798-807, September.
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    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.

    Cited by:

    1. Chulhee Lee & Jinkook Lee, 2011. "Employment Status, Quality of Matching, and Retirement in Korea Evidence from Korean Longitudinal Study of Aging," Working Papers WR-834, RAND Corporation.
    2. Giles, John T. & Wang, Dewen & Cai, Wei, 2011. "The Labor Supply and Retirement Behavior of China's Older Workers and Elderly in Comparative Perspective," IZA Discussion Papers 6088, Institute for the Study of Labor (IZA).
    3. repec:taf:rjapxx:v:19:y:2014:i:1:p:186-201 is not listed on IDEAS
    4. Chulhee Lee, 2010. "Labor-Force Participation of Older Males in Korea: 1955 to 2005," NBER Chapters,in: The Economic Consequences of Demographic Change in East Asia, NBER-EASE Volume 19, pages 281-313 National Bureau of Economic Research, Inc.
    5. Chulhee Lee, 2009. "Labor Force Participation of Older Males in Korea: 1955-2005," NBER Working Papers 14800, National Bureau of Economic Research, Inc.
    6. Chulhee Lee, 2008. "Retirement Expectations of Older Self-Employed Workers in Korea: Comparison with Wage and Salary Workers," Korean Economic Review, Korean Economic Association, vol. 24, pages 33-71.
    7. Klassen, Thomas R., 2012. "The Future of Contractual Mandatory Retirement in South Korea," CLSSRN working papers clsrn_admin-2012-6, Vancouver School of Economics, revised 19 Feb 2012.


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