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This paper investigates the causal relationship between economic fluctuations and changes in the number of self-employed farmers in Korea, using the time-series data from January 1990 to July 2020. To achieve its goal, it uses the Vector Error-Correction Model (VECM) with three endogenous variables, including (1) the Composite Leading Indicator (CLI) as a proxy variable for economic fluctuations, the increase rate of self-employed farmers, and (3) the increase rate of the employed in non-agricultural industries. Our empirical results confirm the substantial inflow of workers from non-agricultural sectors (mostly wage workers in the manufacturing and construction industries) to agriculture in recession, implying that the agricultural sector partially absorbs employment shock hit by recession. However, as indicated by the impulse response function, this unemployment-alleviating effect of agriculture is short-lasting, as its impact is primarily noteworthy in several months after the shock. |
