Young people are medically invulnerable to COVID-19 but vulnerable in the labor market: Korean evidence

BACKGROUND: COVID-19 and its preventive measures affect not only the state of public health but also the economy. The economic impact of COVID-19 varies depending on age, and it is argued that young people have experienced the greatest negative impacts. METHODS: This study was an analysis of the impact of the COVID-19 outbreak in January 2020 on the Korean labor market. Large-scale data from the Economically Active Population Survey from January to June of 2018 to 2020 were used when analyzing the impacts of COVID-19 on unemployment and the economically inactive population by age group. Through this study’s empirical analysis, we examined for this study whether the COVID-19 outbreak has affected the labor market differently based on age. By analyzing the interaction terms of the young person’s status and the time of the COVID-19 outbreak, we determined the impacts of the outbreak on economic inactivity among young people, as well as examining the reasons for these differential effects. RESULTS: Compared with the middle-aged or older group, young people were more likely to become economically inactive than unemployed. Our empirical results using multinomial logistic regression revealed several reasons for the increase in economic inactivity, such as discouragement during the job search, childcare, housework, and studying at an institution, along with other determinants of economic inactivity. Young people showed a significantly higher relative probability of becoming economically inactive or discouraged job seekers following the COVID-19 outbreak when compared to other age groups. In addition, through the analysis of the possibility of employment, the young people responded negatively to the possibility of employment in the future compared to the middle-aged after COVID-19. CONCLUSION: Young people in South Korea possess little career experience in the labor market and tend to be seeking work rather than working. Because economic activities are likely to shrink structurally during a pandemic, it is necessary to empirically determine the damage incurred by people who are vulnerable in the labor markets, such as the younger population which was the subject of this study. Accordingly, future policy directions are suggested for the prevention of a rapid increase in the rate of economic inactivity among the younger population during the pandemic.