Employment Dynamics by Different Firm Size in Korea

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This paper provides empirical evidence that macroeconomic shocks to firms can generate different employment adjustments depending on firm size in Korea. To analyze employment adjustment for different firm sizes, it uses the aggregated employment data across firms and firm-level employment data. Combining evidence from firm-level data that comes from the KIS-Value, it analyzes how firm-level employment responds to regional employment depending on its size. The empirical analysis shows that employment by small and medium-sized firms is more highly synchronized with regional employment than large firms. It also shows that employment by these small and medium-sized firms responds to regional economic conditions. The empirical evidence suggests that smaller firms seem to be more volatile in employment changes and the results imply that any negative shock would lower employment by a reduction in employment by small and medium-sized firms in the economy.