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Analysis on the Determinants of Exit of Self-Employed Businesses in Korea (in Korean)

Author

Listed:
  • Yunmi Nam

    (Economic Research Institution, The Bank of Korea)

Abstract

The proportion of self-employed and unpaid family workers in Korea is 25.9% as of 2015, which is in a decreasing trend but still very high compared to other OECD countries. In addition, there exist a lot of concerns over a high shutdown rate of self-employed businesses while only a few studies have dealt with their survival. Therefore, we empirically analyze the determinants of exit of self-employed businesses in Korea, using panel data on wholesale & retail trade, restaurant & lodging, repair and other individual service industries from "Census on Establishments" provided by the Statistics Korea. With Cox's proportional hazards model, we estimate the effects of various demand, cost, and competition factors on the exit rate of businesses in major industries of self-employment. According to estimation results, cost factors: rents, lending interest rates, and fixed personnel expenses as well as demand factors: consumer price index (CPI) and gross regional domestic product (GRDP) have considerable effects on the shutdown rate of self-employed businesses. The number of competitors and business-specific characteristics such as the age and size of business are also estimated to have significant effect.

Suggested Citation

  • Yunmi Nam, 2017. "Analysis on the Determinants of Exit of Self-Employed Businesses in Korea (in Korean)," Working Papers 2017-5, Economic Research Institute, Bank of Korea.
    • Handle: RePEc:bok:wpaper:1705
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    Cited by:

    1. Jaekyung Lee & Hyunwoo Kim & Hyungkyoo Kim, 2021. "Commercial Vacancy Prediction Using LSTM Neural Networks," Sustainability, MDPI, vol. 13(10), pages 1-17, May.
    2. Jungsun Park & Hanjun Kim & Yangho Kim, 2021. "Factors Related to Psychological Well-Being as Moderated by Occupational Class in Korean Self-Employed Workers," IJERPH, MDPI, vol. 19(1), pages 1-15, December.

    More about this item

    Keywords

    Self-Employment; Exit rate; Cox's proportional hazards model;
    All these keywords.

    JEL classification:

    • L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General
    • D4 - Microeconomics - - Market Structure, Pricing, and Design
    • C10 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - General

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