Production Staging: Measurement and Facts

Has production become more vertically fragmented? To answer this question, this pa-per develops two measures of production staging using input-output tables. These mea-sures exhibit significant variations across industries and time for the US. Interestingly, production has become less vertically fragmented over the past 50 years. An important part of this decrease reflects a shift of value-added towards downstream industries which now contribute to a larger fraction of final goods value. International trade has marginally dampened the decrease in fragmentation, with foreign sourcing mainly substituting do-mestic sourcing. This paper also suggests alternative applications of these indexes to investigate patterns of specialization along production chains