Aggregation Bias in the Measurement of US Global Value Chains

Aaron Flaaen, Fariha Kamal, Eunhee Lee and Kei-Mu Yi

AEA Papers and Proceedings, 2024, vol. 114, 136-42

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.

JEL-codes: D22 F14 F23 L14 (search for similar items in EconPapers)
Date: 2024
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Working Paper: Aggregation Bias in the Measurement of U.S. Global Value Chains (2024)
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DOI: 10.1257/pandp.20241022

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