NTA2020 LeeSH

Global Meeting on Population and the Generational Economy, August 2020

Presentation: Sang-Hyop Lee, Cheol-Kon Park, Health and Work Capacity at Older Ages: Evidence from South Korea and China


By using the methodology of CMR (Cutler, Meara, and Richards-Shubik), this paper estimates the health capacity to work in South Korea and China. In addition, we estimate each country’s economic potentials due to the health capacity to work, by linking the results from their surveys to their National Transfer Accounts. Unlike the other advanced countries, substantial portion of Korean and Chinese elderly (especially in rural areas) do not receive old-age pensions. This also enables us to simulate the health capacity to work for pension eligible group (treatment) and the other who are not (control). The estimated health capacity to work is also reported for various sub-groups. The results suggest that Korea and China seem to have much smaller economic gains from the health capacity to work, compared with other Western economies. The results also imply that the unused health capacity to work is concentrated only on wealthy older people. People with low (and no) public pension benefits are already working close to their limit of their health status. We explain the results by linking them to the unique characteristics of their labor markets and old age support system. This implies that the effect of pension benefit on retirement can vary substantially by country depending on the level of pension benefit as well as labor market conditions and overall old age support system. Hence, it might be misleading to interpret the results in Coile, Milligan, and Wise (2017) as a major outcome of statutory retirement age.

File: NTA2020 LeeSH

Paper: NTA2020 paper LeeSH

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