Christine PINEL Insee, France July, 9th 2008 Implementation of the NACE Rev.2 in the French structural business statistics and data back-casting method

Page 2 NACE Rev.2 and back-casting method C. PINEL, InseeJuly, 9th 2008 A- The French Business Register and the French Annual Business Survey › SIRENE, the French Business Register, counts : –2 Millions firms of the Market sector (except Financial sector) : Industry, Trade and Services –with their Main Activity code, originally declared by the firms › Each year, these Main Activity codes are updated : from the information collected by the Annual Business Survey (ABS) › The French Annual Business Survey is : –the biggest annual survey (sample = 150,000 firms) –the only survey collecting the firms’ breakdown of Turnover according to their different activities

Page 3 NACE Rev.2 and back-casting method C. PINEL, InseeJuly, 9th 2008 B- ABS : Calculation of Main Activity code from the breakdown of Turnover = the most aggregated common activity 49.39A 40 € 49.39B 35 € 49.31Z 50 € Activities Turnover Main Activity code = 49.39A

Page 4 NACE Rev.2 and back-casting method C. PINEL, InseeJuly, 9th 2008 C- Implementation of the NACE Rev.2 › Turning point = January, 1 st 2008  implementation of the NACE Rev.2 in SIRENE  all Main Activity codes must be coded in Rev.2 › Preparation during the year 2007 : –The 2006 ABS especially collected in a so-called “intermediate” classification –300,000 Main Activity codes in NACE Rev.2 directly collected by the SIRENE Register –Adjust of attribution rules from NACE Rev.1 to Rev.2 or the opposite for automatic processing End of the 2006 ABS Beginning of the 2006 ABS

Page 5 NACE Rev.2 and back-casting method C. PINEL, InseeJuly, 9th 2008 D- Principle of the back-casting method › 2008, 2009, etc. : necessary works of back-casting from NACE Rev.1 to Rev.2 or the opposite  particularly, the National Accounts will need high quality back-cast series › The back-casting method : –works at the firm individual level, rather than with aggregated results –uses all available firms information › Following example : the back-casting of the 2005 ABS data (collected in NACE Rev.1) into NACE Rev.2  breakdowns of Turnover, and then Main Activity codes

Page 6 NACE Rev.2 and back-casting method C. PINEL, InseeJuly, 9th 2008 E- Back-casting of breakdown of Turnover 1) Table we use to back-cast › Breakdowns of Turnover of the 2006 ABS :  Collected in the intermediate classification  Known both in NACE Rev.1 and Rev.2

Page 7 NACE Rev.2 and back-casting method C. PINEL, InseeJuly, 9th 2008 E- Back-casting of breakdown of Turnover 2) Two deterministic steps › 1 st step : one-to-one link  Immediate back-casting when the NACE Rev.1 activity has only one link with a NACE Rev.2 activity › 2 nd step : same activity declared by the same firm in the 2006 ABS (with the intermediate classification) –The same links from NACE Rev.1 to Rev.2 as observed in the 2006 ABS are applied to the 2005 ABS data  Assumption : for a particular firm, links observed in the 2006 ABS remain valid for other years

Page 8 NACE Rev.2 and back-casting method C. PINEL, InseeJuly, 9th 2008 E- Back-casting of breakdown of Turnover 3) Two probabilistic steps › 3 rd step : some firms still have activities which are not yet back-cast => hot-deck for each of these firms –Selection of the “best donor” among the 2006 ABS firms –Activities in common with the donor : we apply the links from NACE Rev.1 to Rev.2 observed in the 2006 ABS for the donor › 4 th step : some activities have not been yet back-cast => hot-deck for each of these activities –Selection of the “best donor” among the 2006 ABS activities – Back-casting by applying the links observed in the 2006 ABS for the donor

Page 9 NACE Rev.2 and back-casting method C. PINEL, InseeJuly, 9th 2008 E- Back-casting of breakdown of Turnover 4) Conclusion and final step › Back-casting of the 2005 ABS breakdowns of Turnover from NACE Rev.1 to Rev.2 : › Last step : determination of the Main Activity codes from the back-cast breakdowns of Turnover

Page 10 NACE Rev.2 and back-casting method C. PINEL, InseeJuly, 9th 2008 F- Back-casting of Main Activity codes 1) The deterministic step › Only for firms without breakdown of Turnover in the 2005 ABS › 1 st step : deterministic –if NACE Rev.2 Main Activity code has been collected in 2007 by the SIRENE Register or the 2006 ABS –if NACE Rev.1 M.A. code is the same in 2007 as in the 2005 ABS  The NACE Rev.2 M.A. code collected in 2007 is the back-cast M.A. code for the 2005 ABS

Page 11 NACE Rev.2 and back-casting method C. PINEL, InseeJuly, 9th 2008 F- Back-casting of Main Activity codes 2) The probabilistic step › 2 nd step : probabilistic –if NACE Rev.2 M.A. code has not been collected in 2007 –if Rev.1 M.A. code has changed between 2005 and 2007 › For each M.A. codes in NACE Rev.1 we have : – all possible Main Activity codes in NACE Rev.2 – the probability of each link (from the 2006 ABS and the information collected by SIRENE in 2007)  We attribute a random number to the firm  We select the NACE Rev.2 Main Activity code by comparing this random number to the probabilities of the links

Page 12 NACE Rev.2 and back-casting method C. PINEL, InseeJuly, 9th 2008 F- Back-casting of Main Activity codes 3) Conclusion › Back-casting of the 2005 ABS Main Activity codes from NACE Rev.1 to Rev.2 :

Page 13 NACE Rev.2 and back-casting method C. PINEL, InseeJuly, 9th 2008 Thank you for your attention. Questions ?