Reclassification

Definition

Reclassification. Reclassifications, one of the three I-O methods for handling secondary products, are made as part of the preparation of the standard I-O make and use tables.

Reclassifications are made when BEA decides that a product that the Census Bureau has designated as a primary product should instead be treated for I-O purposes as a secondary product.

For example, in the Census Bureau classification system, the primary product of the newspaper industry is defined as newspaper sales and newspaper advertising. In the I-O system, the primary product of the newspaper industry is newspapers, and the advertising is treated as a secondary product of the newspaper industry and is reclassified to the advertising commodity.

Reclassifications are also made when a product is primary to more than one industry - that is, the final product is the same but it is made using different production processes. In these cases, BEA groups the output in the commodity where the largest amount of it is produced.

For example, sheets can be made in knitting or weaving mills or from purchased fabric. For the I-O accounts, all sheets are treated as a single commodity and are shown as the product of curtain and linen mills.

Reclassifications do not affect the definition of the industry or the measurement of industry output, which consists of the output of both the primary and the secondary products of that industry. However, reclassifications do affect the definition of the commodity and the measurement of commodity output.