Entry and exit of small self-employed businesses in Korea’s service industries

Nakil Sung, Jaekyung Kim

Research output: Contribution to journalArticlepeer-review

2 Scopus citations

Abstract

This study examines the effect of unemployment on the entry of small self-employed businesses (SSBs) in Korea’s service industries and assesses whether the excess entry of SSBs has resulted in their excess exit. Twelve service industries that are frequently regarded as being SSB intensive in Korea are chosen. The Hausman–Taylor model is applied to Korean regional panel data for the period 2006–2014. The empirical results indicate that the relationship between unemployment and SSB formation varies across the sample industries. In particular, the unemployment-push (pull) hypothesis is confirmed in three (six) industries. Additionally, the results show that an increase in the number of existing businesses in the previous year, partly as a result of increased entries, has increased the number of closed SSBs. On the basis of these results, this study assesses the Korean government’s SSB policies and suggests several policy recommendations.

Original languageEnglish
Pages (from-to)303-322
Number of pages20
JournalSmall Business Economics
Volume54
Issue number1
DOIs
StatePublished - 1 Jan 2020

Keywords

  • Excess entry
  • Self-employed business
  • Small business
  • Unemployment

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