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Measurement of Specialization – The Choice of Indices

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Abstract

This paper compares nine common specialization indices, discussing their properties, strengths and weaknesses. In order to unravel the differences between the indices they are applied to European employment structures in 2005, spanning 51 industries and 24 European countries. The resulting heterogeneity levels differ largely between relative and absolute specialization measures, but also within these two groups of indices. As results are highly dependent on which measure is employed, it is important to be aware of carefully choosing appropriate indices in empirical studies in order to attain appropriate conclusions and conduct sound economic policy.

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  • Nicole Palan, 2010. "Measurement of Specialization – The Choice of Indices," FIW Working Paper series 062, FIW.
  • Handle: RePEc:wsr:wpaper:y:2010:i:062
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    More about this item

    Keywords

    specialization indices; industry structure; comparison of indices;
    All these keywords.

    JEL classification:

    • B41 - Schools of Economic Thought and Methodology - - Economic Methodology - - - Economic Methodology
    • C82 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Methodology for Collecting, Estimating, and Organizing Macroeconomic Data; Data Access
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

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