Relationships between elderly employment and labor market outcomes of young and prime-age adults: Evidence from Korean longitudinal and cross-sectional data

Abstract

ABSTRACT Along with an increase in the aging population, the elderly poverty rate is on the rise in Korea. As older people extend working years and delay retirement to secure their financial stability, it raises a concern that an increase in elderly employment may cause high youth unemployment. To understand the relationship between elderly employment and labor market outcomes of other age groups, we use the 1998–2017 Korea Labor and Income Panel Study and 2000, 2005, 2010, and 2015 Korean Population Census. Using a logistic regression model, we find that elderly employment has no relationship with youth employment but a statistically significant relationship with prime-age employment that varies by gender. While older men are likely to substitute for prime-age men, both older men and women are likely to complement prime-age women. Similar results hold for hours of work and weekly wages. The substitutability between older workers and prime-age workers varies by education, occupation, and industry type. The complementarity holds between older male and female workers and prime-age female workers in the less-educated group and the unstable and low-wage industry group and between older male workers and prime-age male workers in the sales and clerical occupation group and the production and service-related occupation group. Overall results suggest the need for expansion of employment opportunities for older adults in the areas with limited substitution to mitigate elderly poverty and improve economic security as older adults appear not to crowd out young and prime-age adults from the labor market.