SIC vs NAICS: Two Approaches to Industry Classification

The Two Systems

SIC (Standard Industrial Classification): A 4-digit hierarchical system developed in the 1930s and last revised in 1987. Classifies organizations based on their overall dominant activity. Still used by SEC for regulatory filings.

NAICS (North American Industry Classification System): A 6-digit system adopted in 1997 by the U.S., Canada, and Mexico. Classifies individual establishments based on their specific output. The current federal statistical standard.

Key Differences

Unit of Analysis: SIC assigns one code to an entire company based on its largest product line. NAICS assigns codes to each establishment (workplace) based on that location’s primary activity.

Structure: SIC uses 4 digits with ~1,500 codes across 10 divisions. NAICS uses 6 digits with ~1,000-1,200 codes, providing more flexibility for emerging industries through “Other…” categories.

Currency: SIC’s last major revision was 1987, before the internet economy. NAICS is reviewed every 5 years; the most recent revision was 2022, with 2027 planned.

Coverage: SIC has extensive manufacturing detail but weak services/technology coverage. NAICS better represents modern service and information economies.

When Each Applies

Use SIC when: Working with SEC filings (still required), historical data pre-1997, or financial databases that maintain SIC indexing.

Use NAICS when: Analyzing Census data (1997+), comparing across North American countries, or needing granular service/technology classifications.

The Bridging Problem

Crosswalks between SIC and NAICS are many-to-many, not one-to-one. Some SIC codes split across multiple NAICS codes; some NAICS codes combine formerly separate SIC categories. This creates discontinuities in time series data that researchers must carefully address.

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