Online Shopping and Generational Consumption Inequality

Abstract

Using COVID-19 as a sudden negative mobility shock in consumption accessibility, we show that the ability to shift to online consumption as an alternative to physical visits to brick-and-mortar stores disproportionately benefits younger people. Employing credit card transaction data linked to cardholders’ demographic characteristics, we construct online spending shares by age group to study the generational disparity in online consumption when consumer mobility was constrained. We estimate a difference-in-difference model based on an exogenous regional outbreak of COVID-19 in South Korea. Our results show that when the mobility costs to offline stores unexpectedly increased due to the pandemic, the older groups (45 and older) were less likely to shift their spending online than younger people (20 - 44). The limited shift to the online consumption of older people resulted in decreases in their total consumption, while that of younger ones changed little, thereby increasing generational consumption inequality. With the rising trend of e-commerce, our findings highlight that the generational difference in the adaptation to new shopping technologies is an increasingly important factor impacting consumption inequality.

Keywords: COVID-19, Online Shopping, Mobility, Consumption Inequality

JEL Classification: D12, D63, I14, L81