The Labor Supply of Korean Women

Hyung-Jai Choi

Ageing of the Population and the Labor Market

The study on women's labor supply is important for several reasons. At a micro level, it
is important to ensure women's economic participation for the sake of their self-development
and self-fulfillment, and at a macro level, it is necessary for efficient use of resources and
continuous growth of the national economy. It is usually the case that women's labor supply
is more responsive than that of men to external factors such as financial incentives and
legal/regulatory environment. Therefore, the changes in such external factors provide good
sources to study women's labor supply behavior. Although matters of self-development and
self-fulfillment are important for the labor supply decision, they will not be dealt with in this
paper as they are highly dependent on the individual situation of the economic players.
Rather, this paper will focus on the macro aspects to understand the reasons why women's
economic participation and labor supply are important social issues in Korea.
In order for a nation to enjoy a sustainable growth, there must be an enough suppy of
productive workers. However, Korea is currently experiencing a birth rate that is extremely
low both historically in Korea and comparatively with other countries. In addition, the higher
quality of life enabled by economic development is giving way to a rapidly ageing society.
As for the birth rate, the total fertility rate (total number of children borne by one woman
during reproductive age), which stood at 4.5 in 1970, declined sharply to a level below the
replacement rate of 2.1 by 1983. The declining trend in fertility continued, and the fertility
rate in recent years remains at around 1.1 ,one of the lowest in the world (see Table 1).
Consequently, population growth rate decreased sharply, from 2.21% in 1970 to 0.2-0.3%

 This paper is an English translation of Chapter 2, “The Labor Supply of Korean Women” of Children's
Education and the Labor Supply of Married Women in Korea (Hyung-Jai Choi) published by the Korea
Labor Institute in 2008.
 The author is a former Research Fellow at the Korea Labor Institute and an associate Professor of Economics
at Korea University at Sejong.

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today. The decreasing number of newborns has led to a much lower share of children
between the age of 0-14 in the entire population, from 42.5% in 1970 to 19.2% in 2005, and
the share of children of this age is forecasted to rise to 8.9% in 2050 (see Table 2).
At the same time, the share of elderly population has risen sharply, due to longer life
expectancy enabled by better quality of life and advancements in medical technology. The
share of 65 or older population, which was only 3.1% in 1970, rose to more than 9% in by
2005 and is forecasted to reach at 38.2% in 2050. the decreasing trend in birth rate, coupled
with the rapid population ageing is reshaping the demographic distribution dramatically, from
the pyramid form of the past to a reversed pyramid of late. The ageing index, indicating the
ratio of elderly population to young population, which stood at 7.2% in 1970 (meaning that
elderly population was only 7.2% the size of the young population), increased to 47.3% in
2005 and is forecasted to exceed 400% by 2050.

Table 1. Crude Birth Rate, Crude Mortality, Total Fertility Rate (1970-2006)
(In thousands, %, per 1,000, 1 woman of reproductive age)

Population
CBR TFR2)
Total Men Women growth rate1)
1970 32,241 16,309 15,932 2.21 31.2 4.53
1980 38,124 19,236 18,888 1.57 22.7 2.83
1990 42,869 21,568 21,301 0.99 15.4 1.59
1995 45,093 22,705 22,388 1.01 16.0 1.65
2000 47,008 23,667 23,341 0.84 13.4 1.47
2001 47,357 23,843 23,514 0.74 11.6 1.30
2002 47,622 23,970 23,652 0.56 10.3 1.17
2003 47,859 24,090 23,770 0.50 10.2 1.19
2004 48,039 24,165 23,874 0.38 9.8 1.16
2005 48,138 24,191 23,947 0.21 9.0 1.08
2006 48,297 24,268 24,030 0.33 9.2 1.13

Note. Total fertility rate is the total number of children borne by one woman during reproductive age. Data
from the National Statistical Office, Population Forecast, Statistical Annals of Population Dynamics,
each year.

Due to such low fertility and population ageing, the share of 15-to-64 age population,
the productive population, is expected to peak around 2010 and then plummet thereafter, all
the way down to 53% in 2050 (see Table 2). Shrinking of the 15-to-64 age group who are
mainly responsible for productive activities will cause a downfall in the overall productive
capacity of the economy, and the subsequent increase in the dependent population is likely to
lead to a multitude of social and economic problems such as the rise in pension expenditure
and tax burden.

2
Table 2. Demographic Composition
(In percentage (%))
0 to 14 years 15 to 64 years 65 years and older Ageing Index
1970 42.5 54.4 3.1 7.2
1980 34.0 62.2 3.8 11.2
1990 25.6 69.3 5.1 20.0
2000 21.1 71.7 7.2 34.3
2005 19.2 71.7 9.1 47.3
2010 16.2 72.9 11.0 67.7
2020 12.4 72.0 15.6 125.9
2030 11.4 64.4 24.3 213.8
2040 10.3 57.2 32.5 314.8
2050 8.9 53.0 38.2 429.3

Note. Data from the National Statistical Office, Population Forecast.

To maintain the population at a sufficient scale, the rapid pace of population ageing
must be slowed down and fertility must be raised. But ageing is not something that can or
should be addressed by deliberate policies. Therefore, the rapid ageing trend will impose a
huge financial burden on the government or the public as the society faces a growing need to
improve the rights and welfare of the elderly population.
A number of maternity support policies have been put in place to deal with the low
fertility issue, but they require sizeable budget to achieve the desired goals. Furthermore,
there is no warrant, at least in the short run, that such policies will bring a positive outcome as
expected. The government is also allowing more inflow of foreign workers to maintain the
appropriate amount of labor, but this cannot be the fundamental solution. Given these
backdrops of the existing policies on ageing and fertility, the active use of women workers
would provide an important policy option that is practically feasible.

Female Labor Force Participation Rate in Korea

Even though the use of the female workforce is becoming more urgent due to the rapid
drop in the birth rate and the accelerating ageing of the population, the female labor force
participation rate (LFPR) in Korea remains much lower than in other developed countries.
According to OECD data, as of 2006 Korean women's labor force participation rate is only
54.8%, much lower than the OECD average of 60.8% and the EU 15 countries' average of
64.2% (see Table 3). Even when compared with the neighbor Japan's female LFPR (61.3%),

3
it is clear that Korean women's LFPR is very low. It becomes even more evident that Korea's
level is very low indeed, when it is compared to Nordic countries where around three fourths
of all productive women are in the labor market. To be fair, the number has steadily grown
over the years, but the pace is very slow and the absolute number also remains very low. For
example, whereas in the past 15 years it has grown by only 5 percentage points in Korea
(from 49.9% in 1990 to 54.8% in 2006), it rose by 13 percentage points in Germany and
almost 20 percentage points in Spain.

Table 3. Women's Economic Participation Rate in Major Countries

(In percentage(%))
1990 1994 2002 2003 2004 2005 2006
U.S. 67.8 69.4 70.1 69.7 69.2 69.2 69.3
U.K. 67.3 67.1 69.3 69.2 69.6 69.6 70.3
Germany 55.5 60.9 64.2 64.5 65.8 66.9 68.5
France 57.2 59.3 62.1 63.4 63.8 63.8 63.9
Spain 41.8 46.3 53.7 55.7 57.7 59.1 61.1
Japan 57.1 58.3 59.7 59.9 60.2 60.8 61.3
Sweden 82.5 77.0 77.1 76.8 76.6 77.7 77.7
Denmark 77.6 73.8 75.9 74.8 76.1 75.1 76.7
Korea 49.9 50.8 53.5 52.9 54.1 54.5 54.8
EU15 56.5 56.5 61.0 61.6 62.7 63.3 64.2
OECD 57.8 57.8 59.6 59.6 60.1 60.4 60.8

Note. Data from the OECD(2006), OECD Employment Outlook.

The low LFPR of Korean women might cause big losses in terms of resource utilization
that may not be readily observable in the economy in general. Particularly, given that Korean
women's education and skill level have steadily risen, fast bridging the gender gap in these
areas, their low participation rate means that quality human resources are being inefficiently
utilized or even wasted. While the gender gap in tertiary education (2-year college or higher)
has remained at 3-5 percentage points (in favor of men) in the past 25 years except in the
early 1990s, the gap for 4-year universities steadily decreased until women actually surpassed
men in recent years (see Table 4). As of 2005, whereas only 56.7% of male high school
students advanced to a 4-year universities, 59.7% of female high school students did so.
Despite such rising education and skill level among women, as of 2005 women's LFPR
(50.1%) remains much lower than that of men's (74.6%). In particular, the participation gap
by gender is increasing among the highly educated (see Table 5). Thus what is urgently
needed are policy instruments that can improve the labor market attachment of women,
especially the highly educated and the high-skilled, to ensure efficient use of human
resources.

4
 To develop effective policy measures to promote women's labor force participation,
there should first be a more detailed understanding of women's labor force participation
behavior and the factors that hinder them from working in the market.

Table 4. Gender Gap in College Enrollment

(In percentage(%))
1980 1985 1990 1995 2000 2005
Total 23.7 36.4 33.2 51.4 68.0 82.1
2-year college or higher Men 25.7 38.3 33.9 52.3 70.4 83.3
Women 20.9 34.1 32.3 49.5 65.4 80.8
Total 16.9 23.8 20.9 34.2 45.3 58.3
4-year university Men 19.0 25.7 22.2 36.7 47.0 56.7
Women 13.9 21.4 19.4 31.5 43.5 59.7

Note. Data from the Education Statistical Annals, each year.

Table 5. Gender Gap in Economic Participation (2005)

(In percentage(%))
Men Women
Total 74.6 50.1
Primary school 57.1 38.9
Middle school 51.5 40.9
High school 77.4 53.4
College or higher 89.4 63.1
College 90.7 67.5
University 89.0 60.3

Note. Data from the National Statistical Office, Economically Active Population Survey.

The pattern of Korean women's LFPR used to show a very clear M-shape, but it has
become less obvious. Figure 1 shows that in 1985, the participation rate for the female 25-to-
34 age group was a mere 40%, noticeably lower than women in other age groups, drawing a
clear M curve. The M curve remained clearly visible until 2000, but recently it has been
eased, as 25-to-34 age group are participating in the labor market at a similar rate to those of
20-to-24 or 35-to-54 age groups.
The fact that women's LFPR draws an M curve indicates that Korean women feel
serious pressure to leave the labor market due to childbirth and childcare. To be fair, such
decision can be made as much voluntarily as involuntarily (due to pressure from the employer
concerned about the(?) loss of productivity caused by the career discontinuity for women
with children and other cost saving purposes. The easing of the M-curve may be attributable

5
to the government's strong drive for maternity protection such as childcare leave or gender-
equal programs, or to the determination by individual women who, concerned by
disadvantages of the career discontinuity, try to stay in the labor market as a way to maximize
lifetime income.

70
60
1985
50
1990
40
1995
30
2000
20
2005
10
0
15-19 20-24 25-34 35-44 45-54 55-59 60-64

Figure 1. Women's Economic Participation Rate by Age Group in Korea. Data from the OECD (2005), OECD
Labour Force Statistics.

Thus, it is not hard to imagine many women today being faced with the dual burden of
childbirth/childcare and competition in the labor market.
Another noteworthy aspect of Korean women's labor force participation pattern is that
participation by women who have completed childbirth or childcare is not any higher than that
of women younger than child-bearing age. As seen in Figure 1, the participation rate of 35-to-
54 age group who are past the child-bearing and rearing stage is similar to or even lower than
that of normally pre-child-bearing 20-to-24 age group. Such pattern is quite different from the
one in other developed economies when women's LFPR peaks in their 40s or 50s. This implies
that the disadvantage of career discontinuity may be more prolonged for women in Korea than
in other developed countries. Such evidence is more readily visible in Figure 2. The female
LFPR in Korea is considerably different from that in major developed economies like Sweden,
the U.S. and Germany where women's rate shows a reversed U-curve similar to men's. These
countries not only show a much higher female LFPR than Korea, but also show continuous rise
in the participation rate until their 40s-50s over the life cycle.
Japan also shows a similar M-curve, but the reduction in the LFPR due to childbirth /
childcare is not as severe as in Korea, and the age when such departure occurs is also older than
in Korea. This is perhaps because in Japan marrying/child-bearing age is older than in Korea.

6
 (%)
100

80 U.S.
Germany
60 Japan
Sweden
40
Korea
Spain
20

15-19 20-24 25-34 35-44 45-54 55-59 60-64 (Age)

Figure 2. Women's Economic Participation Rate by Age in Major OECD Countries.UK/US./Spain age 16-19,
Sweden 16-19, 55-64. Data from the OECD (2005), OECD Labour Force Statistics.

Occupational/Industrial Distribution and

Employment Type of Women in Korea

Although it is important to observe carefully the overall female employment rate or

LFPR in order to understand their economic activities, it is equally important to understand
their occupational and industrial distribution in the different industries to derive policy
implications. Traditionally, while there are industries, such as textile, where women are the
dominant workforce, there are also industries, like manufacturing and construction, that
require physical labor and thus fit male workers better. If such industrial/job segregation
becomes entrenched, women's employment opportunities will be limited because women
must compete among themselves for the limited jobs in the industries considered suitable for
women. On the contrary, if the segregation weakens thanks to improvement in women's skill
level and technological advances, it would be helpful for bringing up women's market
attachment as it will open up their employment opportunities in a broader range of industries
and occupations.
A snap picture of industrial distribution of women in Korea is seen in Figure 3. In 2000,
about two thirds of all female workers are in service industry, with a very small number
working in manufacturing. Specifically, about 20% of Korean female workforce work in
personal services and distribution services, respectively, and about 16% in social services,
while only 16% of all women workers are in manufacturing, showing a high concentration of
Korean women in the service industry.

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 Figure 4 shows the share of female workers in each industry. As of 2005, it is wholesale
and retail trade, hotels, and restaurants that have the highest share of women (55%). Other
industries that have a relatively higher share of female workers include agriculture, forestry,
and fishery (47%), and finance, insurance, real estate, and business service (38%). In
comparison, transportation, storage, and communications (14%), and electricity, gas, and
construction (less than 10%) are those that employ proportionately fewer female workers. A
time-series review of the share of female workers reveals slight changes in the pattern. The
female share steadily increased in transportation, storage, and communications, and also in
wholesale and retail trade, hotels, and restaurants, although the latter went through some
fluctuations. On the other hand, there have been almost no changes in the female share in
electricity, gas, and construction, nor in agriculture and forestry. In finance, insurance, real
estate, and business service, women workers steadily increased until the mid-1990s, then has
steadily decreased since then.
But the biggest change has been found in others, such as public administration,
education, healthcare and social welfare, and domestic service, where women's share jumped
from 34% in 1980 to almost 55% in 2005.

Manufacturing
Others 0.16
0.19

Producer service0.09
Socail
s ervice
0.16 Dis tribution service
0.2
Personal
s ervice 0.2

Figure 3. Industrial Distribution of Women in Korea. Data from the National Statistical Office(2000), National
Census.

To summarize the industrial distribution of female workers, more women tend to make
inroads into the service industry as Korea's industrial structure shifts from the manufacturing-
heavy smokestack type to service dominant-type. There are also signs that they are moving
from the traditionally women-dominant industries to other areas. But such transition is made
very slowly, and it is too early to conclude that women are active in a broad range of sectors.

8
 60.0%
Agriculture, forestry, and fishery

50.0%
Mining and maufacturing

40.0%
Electricity, gas, and construction

30.0%
Wholesale/retail trade, hotels, and
restaurants
20.0%
Transportation, storage, and
communications
10.0%
Finance, insurance, real estate, and
business service
0.0%
Others
1980 1985 1990 1995 2000 2005 Year

Figure 4. Share of Women in Industries Data from the National Statistical Office, Economically Active
Population Survey.

Meanwhile, occupational distribution of Korean women show that one third are in
service and sales industry, and about 16% are in administrative support and
professional/technical, respectively (see Figure 5). But it is only 10% of the entire female
workforce who are in engineering jobs.

Others
0.08 Professional and
technical
Engineering 0.1 0.16

Administrative
Agriculture, forestry, s upport
and fishing 0.16
0.17

Service and sales

0.33

Figure 5. Occupational Distribution of Korean Women. Data from the National Statistical Office(2000),
National Census.

Among employed women, the ratio of wage workers and non-wage workers is about 6:4
as of 2000 (see Figure 6). Considering that among employed men, 63% are wage workers and
37% non-wage, the female wage-non-wage worker ratio indicates that proportionately more
women are engaged in non-wage work such as self-employment or family work.

9
 Non-wage
0.41
W age
0.59

Figure 6. Employment Type of Korean Women. Data from the National Statistical Office (2000), National
Census.

Another indicator of women's labor market behavior that is different from other
developed countries is the one on part-time work. As of 2005, women make up 58% of all
part-time workers in Korea, but in major developed economies the number is over 70% (see
Table 6). Looking at the share of part-timers among all employed women, Korea's number
(12.5%) is only half of that in other developed countries (see Table 7). The reasons may be a
mixture of the following: supply-side factor where the workers do not prefer part-time work
and demand-side factor where the industrial/labor market structure makes the part-time
arrangement more favorable to men.

Table 6. Share of Women out of Total Part-timers in OECD Countries (2005)

(In percentage(%))
1990 1995 2000 2005
OECD total - - 72.0 72.3
Major seven 75.1 74.6 74.2 73.6
EU 15 - 79.6 78.7 78.1
Korea 58.7 61.6 57.7 57.9

Note. Data from the OECD (2005), OECD Labour Force Statistics.

Table 7. Share of Part-timers out of Total Employed Women in OECD Countries (2005)
(In percentage (%))
1990 1995 2000 2005
OECD total - - 20.7 25.6
Major seven 19.2 19.9 19.8 26.5
EU 15 - 28.4 30.0 31.9
Korea 6.5 6.6 9.8 12.5

Note. Data from the OECD (2005), OECD Labour Force Statistics.

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 Marriage, Childbirth, Childcare and Married Women's
Labor Force Participation

It has been reviewed so far that women's LFPR in Korea is generally lower than in other
countries and that disadvantages from career discontinuity are relatively larger and more
extended. Understanding whether such patterns apply commonly to all groups of women or
only to some particular subsets of them would provide important policy implications for
seeking efficient ways to promote women's labor force participation. This section will review
how women's labor force participation patterns differ by marital status and fertility.
Figure 7 shows the trend of the women's employment rate by marital status using the
National Census data. Overall, the female employment rate has risen steadily in the past 10
years, from 36% in 1995 to 40% in 2005. The primary force that led to such rise is married
women.1) Whereas married women's employment rate rose steadily from 36% in 1995 to 42%
in 2005, that of single women's which remained similar to married women's in 1995, fell
slightly to 35% in 2000, then rose slightly until 2005 recovering the level 10 years ago. There
was almost no gap in employment rate by marital status in 1995 but it has widened and
stayed at about 5 percentage points since 2000.

0.45

0.42
0.40
0.40
0.40
0.37 All women
0.36 0.38
0.36 0.37
0.35 Married women
0.35
Single women

0.30
1995 2000 2005

Figure 7. Women's Employment Rate by Marital Status. Data from the National Statistical Office, National
Census, 1995, 2000, 2005.

1) The fact that the rise in women's LFPR has been mostly led by married women, especially those with
children, is a stylized fact that can also be found in other countries like the U.S. (Hayghe, 1997).

11
 0.5
0.43 0.44

0.40
0.4 0.38
0.39
0.38
0.3 All women

0.2 Without children

With children
0.1

0.0
2000 2005

Figure 8. Married Women's Employment Rate by Presence of Children. Data from the National Statistical
Office, National Census, 2000, 2005.

Such gap might have been caused by the drop in employment rate among women in
their late teens and early 20s due to higher education, and more active participation by
married women in the labor market.
Figure 8 shows the difference in employment rate among married women by the
presence of children. Among those without children, 43% were employed in 2000 and the
number remained almost the same in 2005. Those with children also showed a similar pattern,
but theirs' remain 4-5 percentage points lower than that of married women without children
probably because of child caring.

Table 8. Women Workers' Industrial Distribution by Marital Status and Children

Total
Single Married
Without children With children

Manufacturing 0.16 0.16 0.17 0.18 0.17

Producer service 0.09 0.11 0.08 0.13 0.08
Distribution service 0.20 0.20 0.20 0.20 0.19
Personal service 0.20 0.20 0.20 0.18 0.20
Social service 0.16 0.19 0.13 0.25 0.12
Others 0.19 0.14 0.22 0.06 0.24

Note. Data from the:National Statistical Office (2000), National Census.

Table 8 summarizes the industrial distribution of women based on marital status and of

12
married women by presence of children.2) Between single women and married women, the
former are more concentrated in producer services and social services while the latter are
more engaged in other sectors. Compared to women with children, those without children are
more inclined toward producer services and social services with relatively smaller number
being in other sectors.
Women's occupational distribution shows a clearer distinction than industrial
distribution between those with children and those without children and between married and
unmarried (see Table 9). Single women are more distributed in professional, technical or
administerial support positions than married women, while there are proportionately fewer
number of single women working in service and sales. Similar distinction appears between
married women with children and those without. Those without are more distributed in
professional, technical or administerial support positions and less in service, sales or
engineering. In sum, women without a spouse or dependents are more likely to be engaged in
professional or administerial support positions that have relatively long working hours and
rigid working conditions, while those with a spouse or dependents are more likely to be in
service, sales or agriculture, forestry, fishery where the working hours are more flexible.
There is also a clear difference in women's employment status by marital status and the
presence of children. As shown in Table 10, while three fourths of employed single women
are wage workers the wage-non-wage worker ratio is almost 50:50 among employed married
women. Similar distinction is found by the presence of children: whereas 80% of married
women with no children are wage workers, only 47% of married women with children are.

Table 9. Occupational Distribution of Women by Marital Status and Children

Total
Single Married
Without children With children

Professional/technical 0.16 0.23 0.12 0.30 0.11

Administerial support 0.16 0.25 0.11 0.29 0.10
Service/sales 0.33 0.27 0.36 0.26 0.36
Agriculture/forestry/
0.17 0.11 0.21 0.04 0.22
fishery
Engineering 0.10 0.07 0.12 0.08 0.12
Others 0.08 0.07 0.09 0.04 0.09

Note. Data from the National Statistical Office (2000), National Census.

2) It is also in 2000 that the National Census started surveying the presence and number of children.

13
Table 10. Distribution of Employment Status of Employed Women by Marital Status and Children

Total
Single Married
Without children With children

Wage 0.59 0.75 0.49 0.79 0.47

Non-wage 0.41 0.25 0.51 0.21 0.53

Note. National Statistical Office (2005), National Census.

Such difference seems to emerge because women without a spouse or dependents have
relatively less burden of household work or childcare and thus can be employed in permanent,
professional positions that demand substantial work hours with less flexibility.

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