Working Paper: NBER ID: w17916
Authors: Robert C. Feenstra; J. Bradford Jensen
Abstract: When materials offshoring is measured by estimating imported intermediate inputs, a common assumption used is that an industry's imports of each input, relative to its total demand, is the same as the economy-wide imports relative to total demand: this is the so-called "import comparability" or "proportionality" assumption. A report to the National Research Council identified this assumption as being a significant limitation of current data collection and analysis. In this note we move beyond this assumption to obtain a direct measure of imported materials by industry for the United States in 1997. At the 3-digit I-O industry level, there is a correlation of 0.68 between the offshoring shares made with and without the proportionality assumption, and a higher correlation of 0.87 when the shares are value weighted. While most value-weighted industry have differences below 50 percentage points in the two estimates, there is significant number of cases that differ by 10 percentage points or more.
Keywords: No keywords provided
JEL Codes: F1
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| import comparability assumption (P50) | inaccuracies in measuring materials offshoring (F12) |
| revised methodology (C80) | correlation of 0.68 between offshoring shares calculated with and without the proportionality assumption (C59) |
| value-weighted shares (G12) | correlation increases to 0.87 (C10) |
| firm-level data (L20) | accurate allocation of imported inputs across industries (F16) |
| alternative methodology (B41) | better capture of realities of offshoring (F12) |
| previous measures (Y10) | biased estimates (C51) |