| Abstract: | The contracting-out problem in service sector analysis is defined and considered from the viewpoint of choice of statistical unit. It is shown that both the enterprise statistical unit and the establishment- based unit are unsatisfactory for economic analysis. This leads to the recommendation for an "intermediate" statistical unit, namely the "division." The division, by construction and definition, is shown to have desirable properties for analysis of the contracting-out problem (and own-account problem) relating to services. Some empirical evidence with respect to the Canadian service sector economy supports the analysis and suggests a new interpretation of conventional service sector growth statistics. |
