Work Capacity and Socially Sustainable Public Pension System in Aging Societies

By Junghyun Kwon, Taesuk Lee, and Serena Rhee


This brief assesses the work capacity in South Korea and U.S. and draws policy implications. We find two facts: One is that there exists substantial amount of additional work capacity overall and the other is that there is a considerable heterogeneity in work capacity related with differences in educational background. Given these findings, we need to encourage seniors to adjust themselves by providing sufficient time and benefit options when designing socially sustainable public pension schemes. In addition to gradual public pension reforms, we recommend complementary targeted welfare programs, policies to boost the demand for aged workers, and strengthened safety regulations.