The proportion of the ‘Resting’ people increases consistently, mainly among youth. Notably, the number of the ‘Resting’ youth who do not want a job is on the rise, suggesting an increase in the ‘Resting’ youth with a low probability of re-entering the labor market. By education level, while the proportion of youth with lower educational attainment is high, the ‘Resting’ youth with higher educational attainment have increased recently. The shifts in the labor market structures, such as AI diffusion and a growing preference for experienced hires, negatively affect the labor market for youth.

Using the Youth Panel, we classify non-employed youth into three types: ① Job seeking, ② Human capital investment, and ③ Resting. We document that non-employed youth with lower educational attainment have a 6.3 percentage point higher probability of being in the ‘Resting’ state compared to those with higher educational attainment. Furthermore, youth with lower career adaptability are more likely to be in the ‘Resting’ state, with a 4.6 percentage point higher probability. Conversely, youth with higher educational attainment and/or higher career adaptability exhibit a higher probability of choosing ‘Human capital investment.’ Expected returns based on an individual’s potential appear to influence these decisions.

An increase in the period of non-employment by one year is associated with a 4.0 percentage point rise in the probability of being in the ‘Resting’ state, while the probability of ‘Job seeking’ falls by 3.1 percentage points. The adverse impacts of a prolonged period of non-employment are more pronounced among youth with lower educational attainment and/or lower career adaptability. This finding suggests that these youth are more likely to permanently exit the labor market if the period of non-employment lengthens.

Contrary to the view attributing the increase in the ‘Resting’ youth to high job expectations, the findings of this paper indicate that the job expectations of the ‘Resting’ youth are not high, both in absolute and relative terms. The mean of the reservation wage of the ‘Resting’ youth is about 31 million KRW, which is similar to that of other types of non-employed youth. Furthermore, the ‘Resting’ youth exhibit the highest preference for ‘Small and Medium-sized Enterprises (SMEs),’ indicating lower job expectations compared to other non-employed youth who prefer ‘Large firms’ and ‘Public sector.’ These findings suggest that many youth encounter difficulties entering the labor market, despite not having high job expectations.

The policy design for the ‘Resting’ youth should place greater emphasis on incentivizing youth with a lower educational attainment to re-enter the labor market. Career counseling programs are also needed to assist youth in formulating their future career plans and increasing adaptability to changes in occupational environments. Additionally, institutional improvements to working conditions in SMEs, which account for a substantial portion of youth employment, must be pursued.