The Effect of the Small and Medium Sized Retailers and Wholesalers on the Employment in the Manufacturing Industry

The purpose of this study is to analyze the effect of retailers and wholesalers on the employment in the manufacturing industry in Korea. So, this study would like to provide the basic data about the reason why small and medium sized retailers and wholesalers should be protected and promoted. For the empirical analysis, this study used the labor demand model based on the economic theory, built the panel data, and estimated this model using the first difference GMM and system GMM developed by Arrelano and Bond (1991) and Blundell and Bond (1998). Results of estimation showed that small retailers and wholesalers had a strongly positive effect on increase employment in manufacturing industry in Korea. Thus, policies targeted at making small sized retailers more competitive are able to say valid for Korean economy. Meanwhile, small sized retailers and large sized retailers should not see each other as only competitors, but as complementary in the wider context. The retail and distribution industry plays an important role in the nation's economy and therefore efforts to establish a healthy system for the development of this industry are needed.