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June, 2001, Vol. 124, No. 6

The Leontief-BLS partnership: a new framework for measurement

Martin C. Kohli

The Department of Labor," according to Wassily Leontief, "was the first government agency to take an active interest in the ‘input-output’ approach to the study of the American economy and the continual cooperative relationship with its Bureau of Labor Statistics has benefited our work most decisively."¹  The specifics of the Bureau’s role, however, are not well known. Referring to the forecasts the Bureau made during the last year of World War II that the postwar demand for steel would be strong, contrary to the opinion of many experts, Leontief held that the accuracy of this forecast provided evidence that input-output analysis was a useful tool for decisionmakers.² 

Although he cited this episode, Leontief never provided a comprehensive account of the Bureau’s role in the development of input-output analysis, thus leaving the door open for a number of interpretations. Robert Dorfman pointed out that the Bureau’s resources made it possible for the Agency to formulate and develop "very large and detailed input-output tables." ³  Tjalling C. Koopmans described the early work on interindustry economics as "initiated, developed, and stimulated largely by Leontief and given statistical expression by measurements and tabulations produced by the Bureau of Labor Statistics," thereby distinguishing between the intellectual work accomplished by Leontief and the presumably routine data gathering done by the Bureau.⁴  These accounts suggest that the Bureau’s relationship with Leontief was significant largely because the Agency supplied the resources needed to transform his ideas from an academic curiosity into an operational tool for policymakers.

Indeed, a closer examination shows that the Bureau did more than just supply resources. This article proposes that the Department of Labor’s interest stimulated the development of tables that were more useful for policymakers than Leontief’s first formulation was. While the Battelle Memorial Institute summarizes many of the key facts, it gives short shrift to the Bureau’s conceptual contributions.⁵ 

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Footnotes
1 Wassily Leontief, "Preface," in Wassily Leontief, Hollis B. Chenery, Paul G. Clark, James S. Dusenberry, Allen R. Ferguson, Anne P. Grosse, Robert N. Grosse, Mathilda Holzman, Walter Izard, and Helen Kistin, Studies in the Structure of the American Economy (White Plains, NY, International Arts and Sciences Press, 1953), p. 5.

2 Wassily Leontief, "Input-Output Economics," Scientific American, October 1951, pp. 15–21. See also Wassily Leontief, "Input-Output Analysis," in Encyclopedia of Materials Science and Engineering (Oxford, U.K., Pergamon Press, 1985). Both articles are reprinted in Leontief, Input-Output Economics, 2d ed. (New York, Oxford University Press, 1986).

3 Richard Dorfman, "Wassily Leontief’s Contribution to Economics," Swedish Journal of Economics, December 1973, p. 437. See also Richard Stone, "Where Are We Now? A Short Account of the Development of Input-Output Studies and Their Present Trends," in United Nations Industrial Development Organization, Proceedings of the Seventh International Conference on Input-Output Techniques (New York, United Nations, 1984).

4 Tjalling C. Koopmans, "Introduction," in Tjalling C. Koopmans, ed., Activity Analysis of Production and Allocation: Proceedings of a Conference (New York, John Wiley and Sons, 1951), p. 3.

5 Battelle Memorial Institute, Interactions of Science and Technology in the Innovative Process: Some Case Studies (Columbus, OH, Columbus Laboratories, 1973).

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