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

Author

Listed:
  • Nakil Sung

    (University of Seoul)

  • Jaekyung Kim

    (University of Seoul)

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.

Suggested Citation

  • Nakil Sung & Jaekyung Kim, 2020. "Entry and exit of small self-employed businesses in Korea’s service industries," Small Business Economics, Springer, vol. 54(1), pages 303-322, January.
    • Handle: RePEc:kap:sbusec:v:54:y:2020:i:1:d:10.1007_s11187-018-0080-y
    DOI: 10.1007/s11187-018-0080-y
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    References listed on IDEAS

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    More about this item

    Keywords

    Self-employed business; Small business; Excess entry; Unemployment;
    All these keywords.

    JEL classification:

    • L8 - Industrial Organization - - Industry Studies: Services
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship

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