WP 2009-12 Errors from the “Proportionality Assumption” in the Measurement of Offshoring: Application to German Labor Demand
Offshoring has expanded rapidly in most industrialized countries and its impact on the labor markets in these countries has been the source of enormous debate in both scholarly and popular circles. Since data on imported inputs at the sectoral level are not available for the US and the UK, every sector is assumed to import inputs of each material and service in the same proportion as its economy-wide use of that input. German input-output data differentiate between domestically purchased inputs and imported inputs, which permits the authors to calculate a direct measure of sectoral imported input use and compare this measure to the proxy-based measure based on the standard proportionality assumption.
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