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International Trade and Labor Demand of Korean Firms: Focusing on Heterogeneous Firm Productivity (in Korean)

Author

Listed:
  • Jihyun Eum

    (Economic Research Institute, Bank of Korea)

  • Jinho Park

    (Economic Research Institute, Bank of Korea)

  • Moon Jung Choi

    (Economic Research Institute, Bank of Korea)

Abstract

This paper analyzes the effects of trade on demand for labor of trading firms in Korea. We apply system GMM methodology to estimate the effects of imports and exports on employment of Korean manufacturing firms using firm-level data from the Survey of Business Activities of Statistics Korea between 2006 and 2014. According to our estimated results, for firms with high-productivity, exports have a positive and significant effect on the labor demand, while other firms do not show any such significant effects. Furthermore, our results show that offshoring mitigates the positive effects of exports on employment, since tasks within the firms can be relocated abroad. On the other hand, an increase in imports reduces demand for labor because labor is replaced with low-priced imported inputs. Also, when firms partake in global outsourcing, the negative effects of imports are mitigated as those firms expand their production by enhancing their efficiency in the process of offshoring. Therefore, our results suggest that it is important to consider heterogeneous firm productivity as well as offshoring in analyzing the effect of trade on labor demand of firms.

Suggested Citation

  • Jihyun Eum & Jinho Park & Moon Jung Choi, 2019. "International Trade and Labor Demand of Korean Firms: Focusing on Heterogeneous Firm Productivity (in Korean)," Economic Analysis (Quarterly), Economic Research Institute, Bank of Korea, vol. 25(3), pages 30-69, September.
    • Handle: RePEc:bok:journl:v:25:y:2019:i:3:p:30-69
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    More about this item

    Keywords

    Exports; Labor demand; Firm productivity; Offshoring; Global outsourcing;
    All these keywords.

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade

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