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KDI Economic Outlook 2023-2nd Half The Rising Labor Participation of Women in Their 30s: Underlying Factors and Implications October 30, 2023

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KDI Economic Outlook 2023-2nd Half The Rising Labor Participation of Women in Their 30s: Underlying Factors and Implications

October 30, 2023

  • profile
    KIM, Jiyeon
Summary
■ The upward trend in the labor force participation rate among women in their 30s is closely linked to the declining proportion of women with children within this age bracket.

■ Currently, the reduction in the number of women in their 30s with children is mitigating the slowdown in labor supply. However, over time, it could result in a shrinking working-age population and labor force, exacerbating economic and societal challenges.

- Over the next five years (2024-2028), anticipated demographic changes, including a declining working-age population and aging, are forecasted to reduce the number of employed individuals by 30,000 to 40,000 annually. On the other hand, the rising labor force participation rate among women in their 30s is expected to bolster the employment numbers by approximately 40,000 each year, counteracting the effects of these demographic shifts.

- However, the economic participation of women in their 30s is on the rise coinciding with a deepening trend of low birth rates (the total fertility rate declining to 0.7 in the second quarter of 2023). In the long run, this poses alarming concerns regarding economic slowdown, pension fund stability, and deteriorating fiscal health for the government.

■ To address the observed trends and challenges, sustained policy support for work-family balance is essential to simultaneously boost both the labor force participation and birth rate of women during their childbirth and child-rearing years.

- While there appear to be considerable advancements in conditions that support the economic activities of women with children, child-rearing remains a chief deterrent to women’s workforce participation.

- It is essential to further develop and widely promote measures that support work-family balance, including options for reduced work hours during child-rearing phases and flexible work arrangements, alongside fostering a more universally family-friendly workplace culture.

- In addition, it is vital to strengthen economic self-sufficiency and accelerate the transition to family life for younger adults by enhancing their engagement in economic activities, which requires creating high-quality job opportunities to improve their current employment rates that lag behind those of major economies.
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|   Related information   |
Did you know that the economic participation rate of women in their 30s is steadily increasing?
In fact, it is common for economic activity to decrease in people in their 30s,
who mostly go through childbirth and childcare.
Why did women in their 30s have increased their participation in economic activities?
|   Script   |
Typically, the labor force participation rate of women follows an M-shaped pattern:
increasing upon workforce entry, decreasing during childbirth and child-rearing,
slightly rebounding thereafter, and declining as retirement approaches.


However, since the 2010s, there's been a noticeable upward trend in the labor force participation of women in their 30s.
What's behind this shift?

This trend can be traced back to two key factors.

First, the traditionally low engagement of women in their 30s in the labor market is largely due to parenting responsibilities.
A growing number of women staying in the workforce after childbirth is a significant driver of this increased participation rate.

Second, the average labor force participation rate for women in their 30s includes both those with and without children.
 
With the participation rate of women with children being markedly lower than their childless counterparts,
a decrease in the percentage of women with children naturally boosts the overall participation rate.

 
To shed light on the contributions of the two factors, KDI examined the cases of two groups.
Lee Young-Mi, born in 1985 and representing women born from 1983 to 1987,
and Kim Min-Ji, born in 1990, exemplifying those born from 1988 to 1992.


The study compared the situation of each generation when they were between the ages of 30 and 34.
 
The labor force participation rate of women born in 1990, Min-Ji's generation, was 8.8%p higher than that of their predecessors,
Young-Mi's generation, born in 1985.

 
Even when narrowing the focus to women with children,
Min-Ji's younger cohort still exhibits a higher labor force participation rate than Young-Mi's generation.

 
This pattern underscores a wider inclusion of mothers in economic activities in more recent times.

Assuming all other variables remained the same,
the gap in economic participation between women with and without children was 36.4%p in Young-Mi's generation.


This gap has since diminished in Min-Ji's generation,
indicating better conditions and more opportunities for mothers to engage in the workforce,
likely due to enhanced work-life balance policies and greater paternal involvement in childcare.

 
Conversely, there was a significant 15%p drop in the percentage of women with children in Min-Ji's generation compared to Young-Mi’s.
 
This trend points to a shift among younger women, opting either to delay parenthood or to remain childless.

In essence, Min-Ji’s generation witnessed a twofold change:
an increase in the economic involvement of mothers and a concurrent reduction in the percentage of women choosing to have children.


Breaking down the factors contributing to the 8.8%p rise in labor force participation for Min-Ji’s generation,
a 5.3%p of this increase can be attributed to the decreased proportion of women with children.

 
This highlights a growing tendency among women to postpone or forego motherhood,
significantly contributing to the rise in labor force participation among women in their 30s.


Furthermore, the expanded economic participation of women with children also played a substantial role in this increase,
highlighting improvements in work-life balance conditions as another key factor.


Women in their 30s have typically engaged less in economic activities than other age groups,
largely due to childbirth and child-rearing duties.

 
The rapid rise in their economic engagement seems to counteract,
at least in the short term, the diminishing labor supply stemming from a shrinking working-age population.

 
However, the finding showing that much of this increase is largely due to fewer women having children points to a potential dilemma,
as persistently low birth rates may lead to major socio-economic challenges.

 
Even though more mothers are joining the workforce, their overall economic participation remains at a low level.
 
Addressing this requires ongoing support for balancing work and family life,
with the goal of boosting both workforce involvement and birth rates among women in their prime childbearing and child-rearing years.
 
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