LONG-TERM EFFECTS OF JOB MARKET ENTRY CONDITIONS ON EARNINGS: EVIDENCE FROM KOREA

Abstract

With the COVID-19 epidemic inducing economic downturns all around the globe, it’s difficult to predict the recession’s impact on the future of those currently entering the job market. This paper analyzes the short-term and long-term effects of economic conditions at job market entry on earnings and life satisfaction using a sample of South Korean adults who started working in the years 1998-2014. Using panel data from KLIPS, I show that high unemployment rates at job market entry lead to lower earnings for up to 10 years. This finding is in line with past literature on recessions and earnings. In addition, the paper finds that high unemployment rates increase the initial life satisfaction of the employed. The results highlight the importance of policy interventions aimed at reducing unemployment rates and providing support for the unemployed youth.