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Seoul Journal of Economics
[ Article ]
Seoul Journal of Economics - Vol. 34, No. 3, pp.451-480
ISSN: 1225-0279 (Print)
Print publication date 31 Aug 2021
Received 23 Oct 2020 Revised 08 Apr 2021 Accepted 19 Apr 2021
DOI: https://doi.org/10.22904/sje.2021.34.3.005

Establishment Dynamics and Productivity: Is the ICT Industry Improving?

Nyeong Seon Son
Nyeong Seon Son, Associate Fellow, Department of ICT Statistical Information Research, Korea Information Society Development Institute, 18, Jeongtong-ro, Deoksan-eup, Jincheon-gun, Chungcheongbuk-do, 27872, Korea, Tel: +82-43-531-4180 nsson@kisdi.re.kr

JEL Classification: D24, J24, O47

Abstract

The Korean ICT industry has recently experienced low productivity growth. This study examines this decline of labor productivity growth using the perspective of establishment dynamics. The establishment dataset covering one or more employees shows that the ICT industry has higher entry and exit rates than the other sectors. However, active reallocation in the ICT industry has slowed and the contribution of entrants to productivity growth has rapidly declined, especially in its service sector. Results show that the slowdown of establishment dynamics is related to the decline in productivity growth in the ICT industry.

Keywords:

Establishment Dynamics, ICT Industry, Productivity Growth, Entry and Exit

Acknowledgments

This paper extracts and revises the report on “Establishment Dynamics and Productivity Analysis: Focusing on ICT industry, KISDI Research Report 19-14-03” conducted by KISDI, 2019 (in Korean). I thank Statistics Korea and the Korea Statistics Promotion Institute for providing access to the data used in this study. All results have been reviewed to ensure that no confidential information is disclosed.

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