Exporting, Employment, and Skill Upgrading: Evidence from Plant Level Data in the Korean Manufacturing Sector

This paper examines the role of exports in skill upgrading in the Korean manufacturing sector during the 1990s utilizing a unique plant-level panel data set. The empirical results indicate the important role of exports on relative employment on skilled versus unskilled workers. The main findings are as follows. Firstly, this paper documents the significant degree of skill upgrading that occurred during the 1990s in the Korean manufacturing sector. Secondly, a large part of the increase in the aggregate non-production employment share was due to the \within. effect, rather than the \between. effect. This tendency becomes stronger when we use plant-level, rather than industry-level data. Thirdly, most of the \within. changes were accounted for by the skill-upgrading of exporters, especially those exporters that were either R&D active or large. This is suggestive of the positive interactive effects between exporting and R&D expenditure in skill upgrading. Fourthly, regression analysis shows that both the \within. and \between. components of skill composition changes at plant level are strongly and positively correlated with exporting activities, while R&D expenditure is correlated only with the \within. components.