In this year's annual revision of the U.S. international transactions accounts, the estimates of cross-border trade in services were revised to incorporate reclassifications and improvements in source data. These estimates were first presented in tables 1 and 4 of "U.S. International Transactions, Revised Estimates for 1982–98" in the July 1999 SURVEY OF CURRENT BUSINESS. That article also discussed the sources of the revisions, which are summarized below.
Redefinition of services.—Compensation of employees, which was previously included in services, is now classified as income and thus is no longer part of services. This reclassification begins with the estimates for 1986 because the source data to make the reclassification for earlier years are not available. Compensation of employees includes wages, salaries, and other benefits, in cash or in kind, that are earned by or received from individuals in countries other than those in which they are residents.
Three components of compensation receipts have been reclassified: Compensation receipts of U.S. residents employed temporarily abroad, compensation receipts of U.S. residents employed by international organizations in the United States (such as the World Bank, the International Monetary Fund, and the United Nations), and compensation receipts of U.S. residents employed by embassies and consulates of foreign governments in the United States. The amount reclassified in 1998 was $1.9 billion.
Four components of compensation payments have been reclassified: Compensation paid to Canadian and Mexican workers who commute to work in the United States, compensation paid to foreign students studying at colleges and universities in the United States, compensation paid to foreign professionals temporarily residing in the United States, and compensation paid to temporary agricultural and nonagricultural workers. The amount reclassified was $4.6 billion in 1998.
Medical services.—Estimates of receipts for medical services provided to foreign residents at U.S. hospitals have been revised for 1995–98, using a revised methodology and newly available source data. These estimates are prepared by summing the estimates of inpatient and outpatient care. Inpatient estimates are based on information on hospital inpatients (patients who spend at least 1 night at the hospital) provided by State regulatory agencies, hospital associations, and hospitals with international medical centers. Inpatient charges cover physicians' fees, tests, drugs, and room and board. Outpatient estimates are based on data provided by individual hospitals. Outpatient services cover outpatient surgery, physical rehabilitation and therapy, AIDS treatments, and consultations. The annual revisions to medical receipts for 1995–98 were small—$16 million in 1995, $132 million in 1996, $224 million in 1997, and $318 million in 1998.
Overseas travel payments.—Estimates of U.S. residents' expenditures while traveling overseas are revised to incorporate the results of a one-time survey by D.K. Shifflet covering 1998. The results of this survey, which was completed by U.S. residents after they returned home from their trip, were compared with the results of the International Trade Administration's ongoing in-flight survey that BEA uses to measure U.S. travelers' expenditures, which is completed by travelers on their flights as they depart the United States.
BEA used the one-time survey to determine the relationship between a U.S. traveler's expected expenditures and that traveler's post-trip reported expenditures by comparing expected per-person, per-day expenditures with post-trip expenditures for three major regions: Europe; Asia and Pacific; and Latin America and Other Western Hemisphere (excluding Mexico). The results of this comparison indicate that U.S. travelers' expected expenditures in Latin America understated post-trip reported expenditures by 8 percent, expected expenditures in the Asia and Pacific region understated post-trip reported expenditures by 5 percent, and expected expenditures in Europe neither understated nor overstated post-trip reported expenditures.
BEA has adjusted its estimates from the ongoing survey to correct for these understatements. These adjustments raised travel payments by $1.7 billion in 1998. Limited information indicates that the differences between expected and post-trip expenditures to Latin America and to the Asia and Pacific region narrow before 1998. Therefore, BEA has adjusted its 1997 estimates of travel payments using one-half the value of the adjustments for 1998. BEA has not adjusted its estimates for the years before 1997.