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Manufacturing Establishments Reclassified Into New Industries: The Effect Of Survey Design Rules

Listed author(s):
  • Robert H Mcguckin
  • Suzanne Peck
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    Establishment reclassification occurs when an establishment classified in one industry in one year is reclassified into another industry in another year. Because of survey design rules at the Census Bureau these reclassifications occur systematically over time, and affect the industry-level time series of output and employment. The evidence shows that reclassified establishments occur most often in two distinct years over the life of a sample panel. Switches are not only numerous in these years, they also contribute significantly to measured industry change in industry output and employment. The problem is that reclassifications are not necessarily processed in the year that they occur. The survey rules restrict most change to certain years. The effect of these rules is evidenced by looking at the variance across industry growth rates which increases greatly in these two years. Whatever the reason for reclassifying an establishment, the way the switches are processed raises the possibility of measurement errors in the industry level statistics. Researchers and policymakers relying upon observations in annual changes in industry statistics should be aware of these systematic discontinuities, discrepancies and potential data distortions.

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    Paper provided by Center for Economic Studies, U.S. Census Bureau in its series Working Papers with number 92-14.

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    Date of creation: Nov 1992
    Handle: RePEc:cen:wpaper:92-14
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    1. Timothy Dunne & Mark J. Roberts & Larry Samuelson, 1988. "Patterns of Firm Entry and Exit in U.S. Manufacturing Industries," RAND Journal of Economics, The RAND Corporation, vol. 19(4), pages 495-515, Winter.
    2. John R. Baldwin & Paul K. Gorecki, 1991. "Firm Entry and Exit in the Canadian Manufacturing Sector, 1970-1982," Canadian Journal of Economics, Canadian Economics Association, vol. 24(2), pages 300-323, May.
    3. John R. Baldwin & Paul K. Gorecki, 1990. "Firm Entry and Exit in the Canadian Manufacturing Sector," Working Papers 767, Queen's University, Department of Economics.
    4. Thomas A Abbott III & Stephen H Andrews, 1990. "The Classification of Manufacturing Industries: an Input-Based Clustering of Activity," Working Papers 90-7, Center for Economic Studies, U.S. Census Bureau.
    5. John Haltiwanger & Steven J Davis & Scott Schuh, 1991. "Published Versus Sample Statistics From The ASM: Implications For The LRD," Working Papers 91-1, Center for Economic Studies, U.S. Census Bureau.
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