Institute for Research on Labor and Employment

This paper explores trends in inter-firm transactions (IFT) in the U.S. in relation to the varied approaches that researchers have used to study domestic outsourcing. I develop a typology of IFT that references distinct definitions of outsourcing, and I generate a new methodology for measuring domestic IFT using the Bureau of Economic Analysis National Input-Output Accounts data. I analyze IFT trends for individual industries and for three groups: all goods and services, all services, and only services that could feasibly be produced in-house by the purchaser. Trends in IFT vary considerably across industries, but IFT for services and for feasibly in-house services have increased in recent decades, both as a portion of total economic output and as a portion of services output. This study offers the first comprehensive assessment of changes in domestic IFT in the U.S., and establishes a conceptual and empirical foundation for further research on domestic outsourcing.