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Aggregation Bias in the Measurement of US Global Value Chains

Author

Listed:
  • Aaron Flaaen
  • Fariha Kamal
  • Eunhee Lee
  • Kei-Mu Yi

Abstract

This paper employs US census microdata to construct establishment-level measures of global value chains (GVCs) and then assesses aggregation bias—the bias occurring when an entire industry is essentially treated as a single establishment. Our establishment-level measures indicate little slowdown in GVC expansion between 2002 and 2012. Related, the aggregation bias is negative, and it increased during this period. A decomposition reveals that most of the increase is from within establishments with high export and import intensities. Our results suggest that granular GVC measures will provide further understanding about how firms and economies adjust to shocks.

Suggested Citation

  • Aaron Flaaen & Fariha Kamal & Eunhee Lee & Kei-Mu Yi, 2024. "Aggregation Bias in the Measurement of US Global Value Chains," AEA Papers and Proceedings, American Economic Association, vol. 114, pages 136-142, May.
    • Handle: RePEc:aea:apandp:v:114:y:2024:p:136-42
    DOI: 10.1257/pandp.20241022
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    More about this item

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation

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