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The Effects of Industry Classification Changes on US Employment Composition


  • Teresa C. Fort
  • Shawn D. Klimek


This paper documents the extent to which compositional changes in US employment from 1976 to 2009 are due to changes in the industry classification scheme used to categorize economic activity. In 1997, US statistical agencies began implementation of a change from the Standard Industrial Classification System (SIC) to the North American Industrial Classification System (NAICS). NAICS was designed to provide a consistent classification scheme that consolidated declining or obsolete industries and added categories for new industries. Under NAICS, many activities previously classified as Manufacturing, Wholesale Trade, or Retail Trade were re-classified into the Services sector. This re-classification resulted in a significant shift of measured activities across sectors without any change in underlying economic activity. Using a newly developed establishment-level database of employment activity that is consistently classified on a NAICS basis, this paper shows that the change from SIC to NAICS increased the share of Services employment by approximately 36 percent. 7.6 percent of US manufacturing employment, equal to approximately 1.4 million jobs, was reclassified to services. Retail trade and wholesale trade also experienced a significant reclassification of activities in the transition.

Suggested Citation

  • Teresa C. Fort & Shawn D. Klimek, 2018. "The Effects of Industry Classification Changes on US Employment Composition," Working Papers 18-28, Center for Economic Studies, U.S. Census Bureau.
  • Handle: RePEc:cen:wpaper:18-28

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    Cited by:

    1. David Berger & Kyle Herkenhoff & Simon Mongey, 2022. "Labor Market Power," American Economic Review, American Economic Association, vol. 112(4), pages 1147-1193, April.
    2. Parag Mahajan, 2021. "Immigration and Local Business Dynamics: Evidence from U.S. Firms," Working Papers 21-18, Center for Economic Studies, U.S. Census Bureau.
    3. Lucia S. Foster & John C. Haltiwanger & Cody Tuttle, 2022. "Rising Markups or Changing Technology?," NBER Working Papers 30491, National Bureau of Economic Research, Inc.
    4. William D. Lastrapes & Ian Schmutte & Thor Watson, 2022. "Home equity lending, credit constraints and small business in the US," Economic Inquiry, Western Economic Association International, vol. 60(1), pages 43-63, January.
    5. Melissa Chow & Teresa C. Fort & Christopher Goetz & Nathan Goldschlag & James Lawrence & Elisabeth Ruth Perlman & Martha Stinson & T. Kirk White, 2021. "Redesigning the Longitudinal Business Database," Working Papers 21-08, Center for Economic Studies, U.S. Census Bureau.
    6. Xiang Ding & Teresa C. Fort & Stephen J. Redding & Peter K. Schott, 2019. "Structural Change Within Versus Across Firms: Evidence from the United States," Working Papers 2019-9, Princeton University. Economics Department..
    7. Kevin Rinz, 2018. "Labor Market Concentration, Earnings Inequality, and Earnings Mobility," CARRA Working Papers 2018-10, Center for Economic Studies, U.S. Census Bureau.
    8. Nathan Goldschlag & Javier Miranda, 2020. "Business dynamics statistics of High Tech industries," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 29(1), pages 3-30, January.
    9. Claudia Macaluso & Brad Hershbein & Chen Yeh, 2019. "Concentration in U.S. local labor markets: evidence from vacancy and employment data," 2019 Meeting Papers 1336, Society for Economic Dynamics.
    10. Nicholas Bloom & Andre Kurmann & Kyle Handley & Philip Luck, 2019. "The Impact of Chinese Trade on U.S. Employment: The Good, The Bad, and The Apocryphal," 2019 Meeting Papers 1433, Society for Economic Dynamics.

    More about this item

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity

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