A leading method of identifying the so-called optimal self-employment rate in Korea involves conducting a regression analysis on economic and demographic data from Korea and other OECD countries. With this approach, the optimal Korean self-employment rate is defined as the rate predicted by the regression analysis if all controlled conditions in Korea were equal to the OECD means. The difference between this optimal Korean rate and the actual rate in Korea supposedly indicates how excessively high the Korean self-employment rate is (Suh GH, Suh CS, and Yoon SW 2013; Noh HB et al. 2009). Based on this and depending on analytical method and year, it has been estimated that the share of Korean self-employed workers across all industries was 25.3–25.8%, but that the optimal rate (i.e. the OECD average) was 9.6–17.8%. In the same study, the actual 2007 self-employment rate for Korean wholesale and retail trade was 37.1%, while the optimal rate was calculated to be 23.0–23.4%. In hotels and restaurants, the level in 2007 was 32.0%, but the optimal rate came to 20.8–21.6% (Suh GH, Suh CS, and Yoon SW 2013; Noh HB et al. 2009).
However, this analytical method is based on several questionable assumptions. First, it assumes that the correlation between the Korean self-employment rate and the Korean economy as a whole is similar to the correlations between the self-employment rates of other OECD nations and their economies. However, as pointed out in the main body of this study, the Korean self-employment rate is not aligned with the Korean economic development level, and this misalignment is likely related to the undeveloped Korean employment structure, which is linked to the self-employment rate (Ryoo JW and Choi HY 1999; Lee BH et al. 2016, Lee BH and Shin JY 2011). Second, this approach assumes the mean OECD self-employment rate calculated using this approach is actually optimal. However, this method of analysis only reveals how low the Korean self-employment rate would be if certain conditions in other countries applied equally to Korea. Because this method does not use objective criteria for optimal or non-optimal size, it can only infer its conclusions based on relative comparison. Third, this method assumes that the concept itself of an optimal self-employment rate is meaningful. However, as explained in the main body of this study, simply estimating a so-called optimal self-employment rate without considering the implications of the the self-employment sector being composed of both weak and non-weak self-employed workers is not a particularly useful approach. Fourth, this method assumes a direct link between the self-employment rate and weakness in the self-employment sector. But the main body of this study demonstrates that no such direct relationship exists between the self-employment rate and the self-employment sector.
