The Bank of Korea published an issue note examining how delayed entry into the labor market and higher housing cost burdens affect South Korea's youth over their lifetimes. The note argues that these are structural constraints on growth rather than only individual hardships, because they weaken human capital formation, employment stability, income, asset accumulation and financial soundness. Its analysis links longer early non-employment to worse later labor outcomes. If the non-employment period is one year, the probability of working as a regular employee five years later is 66.1%, compared with 56.2% if it extends to three years, while each additional year of past non-employment reduces current real wages by 6.7%. On housing, a 1% rise in housing costs is associated with a 0.04% fall in total assets, and a 1 percentage point increase in the housing expenditure share reduces the education expenditure share by 0.18 percentage points. The note ties these pressures to labor market dualism, employer preference for experienced hires, a slowdown in decent job creation, and a supply-demand mismatch in small non-apartment housing used by many young single-person renters. As policy implications, the note points to more fundamental measures in labor and housing markets, including easing labor market rigidities, improving the corporate growth ladder to reduce labor market segmentation, and expanding the supply of small housing. For the short term, it suggests broader work experience support to limit youth detachment from the labor market and stronger financial support for minimum housing stability.
Bank of Korea2026-01-28
Bank of Korea issue note finds delayed youth job entry and higher housing costs weaken earnings assets and job stability
The Bank of Korea published an issue note arguing that delayed labor market entry and high housing costs are structural pressures on South Korea's youth and on longer-term growth. Its analysis found that extending non-employment from one year to three years cuts the probability of regular employment after five years to 56.2% from 66.1%, while a 1% rise in housing costs reduces total assets by 0.04%. The note points to labor market rigidities and a shortage of small housing supply, and suggests more work experience support and housing assistance in the short term.