The use of the elderly workforce has become a key factor in determining the continued growth of the economy as concerns over labor shortages have been raised due to the decline in population and rapid aging. In order to minimize the negative impact of...
The use of the elderly workforce has become a key factor in determining the continued growth of the economy as concerns over labor shortages have been raised due to the decline in population and rapid aging. In order to minimize the negative impact of aging on the labor market, the government introduced a wage peak system that supports part of labor costs when extending the retirement age, and enacted the Retirement Age Extension Act (2016).
This research is differentiated from the existing research in this study for the following two reasons. First, unlike previous studies, the private sector was examined. Compared to the public sector, research on the private sector where market principles work as well as the size of elderly workers can provide important implications for the continuity and improvement of the system in the future. Second, compared to previous studies that examined relatively short-term changes after the introduction of the wage peak system, this study examined the employment effect over a long period of time. This is because it is important to look at changes over a long period of time along with short-term effects in order to properly grasp the effects of the wage peak system. This study conducted a difference-in-differences (DID) analysis using private business data among the data from 2005 to 2017 of the Workplace Panel Survey(WPS) of the Korea Labor Institute.
Specifically, the changes in employment before and after the introduction of the wage peak system between the two groups were compared with the treatment group for the first time in 2011, and the control group for companies that never introduced the wage peak system from 2005 to 2017.
First, we looked at how the wage peak system affects the employment of all workers. According to the analysis results, in a simple model that does not control business characteristics, it is confirmed that the wage peak system negatively affects employment, but controlling multiple corporate characteristic variables such as sales does not have statistically significant values. As a result of analyzing how the wage peak system affects workers under the age of 30 and workers over the age of 50, it did not have a significant value likewise. Furthermore, as a result of analyzing the effect of the wage peak system on employment by age group through the panel regression model, it was confirmed that the wage peak system did not significantly affect employment growth rate under the age of 30 or employment over the age of 50. It was judged that employment was on the decline recently, and it was difficult to determine whether the wage peak system had a positive or negative effect on employment.