Title : The Long-Term Effect of Unemployment Experience on Household Consumption

Author : Young Jun Choi(Micro & Institutional Economic Studies Team)

Since the 1997 currency crisis, South Korea's macro household consumption growth has significantly slowed, unable to recover its previous trend. Despite studies on the persistent impact of past shocks, known as "scarred consumption," research on this phenomenon is lacking in South Korea. Following Malmendier and Shen (2024), this paper empirically analyzes the influence of past unemployment experiences on household consumption using micro-panel data. The results indicate a statistically significant negative impact, suggesting that shocks post-1997 had a long-term adverse effect on household consumption, especially among income and asset-vulnerable groups.