'Economic Impact Assessment of the Recent Spread of Single-Person Households'
"Post-Pandemic Decline in Single-Person Household Consumption Worse Than Multi-Household"
"Acts as a Structural Constraint Factor in Our Consumption"
As perceptions of marriage and demographic structures change, the number of single-person households continues to rise, and an analysis has emerged showing that the economic situation of single-person households is more vulnerable compared to multi-person households. Although the proportion of single-person households is steadily increasing, their consumption is slowing down, raising concerns that this could become a limiting factor for domestic demand in the future.
On the 3rd, the Bank of Korea released a report titled "BOK Issue Note, Recent Expansion of Single-Person Households and Its Economic Impact: Focusing on Consumption," stating that "the proportion of single-person households among all households reached 35.5% in 2023, meaning one out of every three households is a single-person household," and that "this is the highest proportion based on household size and the growth rate has been very rapid since the COVID-19 pandemic." Accordingly, the economic behavior of single-person households is having an increasingly significant impact on the Korean economy. The share of consumption expenditure by single-person households has rapidly increased over the past decade, accounting for about 20% of total consumption expenditure as of 2023.
Single-person households are analyzed to have ▶lower income ▶smaller asset size ▶a higher proportion of simple and temporary jobs compared to multi-person households, indicating relatively weaker economic conditions. Compared to other advanced countries, the income gap between single-person and multi-person households in Korea is larger, and the level of social security is relatively lower. Looking at the equivalized income level of single-person households relative to total households by country, Korea stands at 66%, significantly lower than leading countries such as Spain (92.9%) and Switzerland (92.5%). Young single-person households face a heavy burden of housing costs, while elderly single-person households are vulnerable in terms of employment stability.
Weakened Consumption of Single-Person Households After the Pandemic... Negative Impact on Overall Consumption Recovery
The average propensity to consume of single-person households has weakened more than that of multi-person households since the pandemic, negatively affecting the overall consumption recovery of the Korean economy. Examining changes in average propensity to consume (consumption expenditure/disposable income) by household size since the pandemic, the average propensity to consume for all households decreased by only 3.1%, from 0.73 in 2019 to 0.70 in 2024. In contrast, single-person households saw a 5.8% decrease, from 0.78 to 0.74 during the same period. This is a larger change compared to 2-person households (-2.5%), 3-person households (-4.3%), and 4-person households (-0.5%).
Jaeho Lee, head of the Bank of Korea’s research team who authored the report, said, "As the share of single-person households in total consumption expenditure continues to rise, the decline in their propensity to consume acts as a structural constraint on our consumption."
Housing Costs, Rising Living Expenses, Employment Shocks... Greater Impact on Single-Person Households
This is the result of combined factors during the pandemic period, including ▶rising housing costs ▶increased living expenses ▶employment shocks centered on temporary and daily jobs ▶income shocks due to crises. In the consumption expenditure items of single-person households, housing, water, electricity, and fuel costs accounted for 20.2% in 2023, a higher proportion than the 14.8% for all households. With a high share of housing costs, the increase in monthly rent after the pandemic has constrained the propensity to consume, especially among young people. The rapid rise and high volatility of living expenses also contributed to dampening consumer sentiment. Existing research suggests that single-person households, due to difficulty in risk-sharing among household members, may experience greater impacts from shocks caused by COVID-19.
Lee said, "Considering the main causes of the weakened propensity to consume among single-person households, strengthening the domestic demand base requires ensuring housing, income, and employment stability for these households, with policy approaches tailored by age group." He added, "For young single-person households, housing stability measures to alleviate the heavy burden of housing costs are urgently needed, while for elderly single-person households, poverty measures addressing poor income and employment issues should be prioritized."
He continued, "However, support measures targeting only single-person households may lead to unintended consequences, such as conflicts with low birthrate policies. It is desirable to address the issues of single-person households in a balanced manner within a policy framework that encompasses all vulnerable groups, as seen in overseas cases like the United Kingdom."
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