Exports and firm employment: the roles of R&D and exports to affiliates

Abstract

ABSTRACT Firm-level data from the Korean manufacturing sector is used to quantify the impact of both the extensive and intensive margins of exporting on employment, emphasizing the role of both firm-level R&D intensity and exports to foreign affiliates. The employment effects of exporting by employment contract status, i.e. regular or non-regular employees, are also separately examined. Here, findings show that a firm’s entry into export markets has a positive effect on its employment of regular workers; further, this positive effect is apparent in firms that belong to the group with the highest level of R&D intensity. With regard to the intensive margin, findings show that the negative impact on regular employment of firms’ export share in total sales stands out in the case of exports to non-affiliates. This negative impact, related to the intensive margin, is apparent in firms belonging to the group with the lowest R&D intensity, which is in line with the results for the extensive margin. The heterogeneous effects of exports depending on both firm-level R&D intensity and exports to foreign affiliates seem to be associated with the uncertainty that is due to the volatility of overseas sales.