Decline in Labor Force Participation Among Young Men... BOK Cites Competition, Industrial Shifts, and AI Expansion as Causes

Labor Force Participation Rate Among Young Men Down 7.6 Percentage Points from 2000

Decline Exceeds OECD Average

Competition Intensifies with Highly Educated Women

Drop in Medium- and Low-Skilled Jobs in Manufacturing and Construction

A recent study has found that the labor force participation rate among young men aged 25 to 34 has dropped significantly compared to the year 2000, due to changes in competitive dynamics and industrial structures. The study points out the need to promote young men's entry into the labor market through technical education and to ease rigidity in the employment market.

According to the Bank of Korea's 'BOK Issue Note—Assessment of the Declining Trend in Labor Force Participation Rate among Young Men (Yoon Jinyoung, Oh Youngsik, and Oh Samil)' published on April 14, the labor force participation rate for young men fell from 89.9% in 2000 to 82.3% last year, a decrease of 7.6 percentage points. This decline is particularly notable compared to the average among major OECD countries, which have maintained a rate in the 90% range during the same period.

The Bank of Korea identified three main factors driving this decline in youth labor force participation: changes in the competitive structure among young people, shifts in industrial structure, and contraction of labor market entry pathways due to aging and the spread of artificial intelligence (AI). Firstly, as more highly educated women participate in economic activities, competition from the labor supply side has intensified. The labor force participation rate for highly educated men born between 1991 and 1995 dropped by 15.7 percentage points compared to those born between 1961 and 1970, while the rate for women increased by 10.1 percentage points. The Bank of Korea analyzed, "As the labor supply for the same jobs has expanded, this suggests that the environment for young men entering the labor market has become much more competitive than in the past."

Regarding changes in industrial structure, the primary impact has been a reduction in labor supply among men with an associate degree or less. Last year, the probability of labor supply among men with an associate degree or lower was 2.6 percentage points lower than in 2000. The Bank of Korea explained that as the number of medium- and low-skilled jobs in manufacturing and construction has declined, overall labor demand for this group has decreased.

Aging and the spread of AI are also acting as factors restricting pathways for youth entry into the labor market. From 2024 to 2025, the employment rate among older adults increased by 12.3 percentage points, with most of this growth concentrated in highly skilled jobs. Notably, the majority (98.3%) of youth jobs lost over the past four years were in industries with high AI exposure, indicating that the spread of AI is having a negative impact on entry-level jobs in its early stages.

The Bank of Korea proposed that policy efforts are needed to support young men’s entry into the labor market. Yoon Jinyoung, head of the Employment Research Team at the Bank of Korea’s Research Bureau, emphasized, "It is important to systematically support young men’s smooth entry into the labor market by strengthening technical education, which has become increasingly necessary due to changes in the industrial structure." He added, "Rather than relying solely on short-term support measures, it is crucial to simultaneously ease the excessive rigidity of permanent employment protection, promote the conversion of non-regular workers to regular positions, and improve the overall structure of the labor market."

This content was produced with the assistance of AI translation services.