What is Shift-Share Analysis?

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What is Shift-Share Analysis?

• One way to account for a regions competitiveness
• Provides a picture of how well a regions mix of
  industries is performing
• Also, shows how well individual industries are
  doing
• Can be used to analyze individual industries or
  the whole economy

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What is Shift-Share Analysis?

• Breaks down regional employment growth into three
  components
• National share (NS)
• Industry mix (IM)
• Regional shift (RS)

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What is Shift-Share Analysis?

• National Share (NS) Component
• Share of regional job growth attributable to
  growth of the national economy
• If the regional industry grew at the industrys
  national growth rate, what would be the result?

Where t current time period t-1 one year
ago i specific industry r specific region
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What is Shift-Share Analysis?

• Industry Mix (IM) Component
• How much growth can be attributed to the regions
  mix of industries?
• Also estimates how many jobs were created/not
  created in each industry due to differences in
  industry and total national growth rates

Where t current time period t-1 one year
ago i specific industry r specific region
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What is Shift-Share Analysis?

• Regional Shift (RS) Component
• How many jobs are created/not created as a result
  of the regions competitiveness?
• Perhaps the most important component
• Identifies the regions leading and lagging
  industries

Where t current time period t-1 one year
ago i specific industry r specific region
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A Shift-Share Example

• Compare a county to the U.S. economy.
• Well use 1993 and 1998 with total employment
  divided into six sectors.
• Rule of thumb is to use two time periods 5 or
  fewer years apart.
• Analysis can be quite different for different
  time periods.

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A Shift-Share Example

• National total employment and by major industry
  sector, 1993 1998.

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A Shift-Share Example

• Calculate the percentage change in U.S. total
  employment and by industry sector.

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A Shift-Share Example

• County total employment and by major industry
  sector, 1993 1998.

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A Shift-Share Example

• Calculate the percentage change in the countys
  total employment and by industry sector.

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A Shift-Share Example

• Calculating the NS component.

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A Shift-Share Example

• Calculating the NS component.

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A Shift-Share Example

• If the countys industries grew at the overall
  national rate of growth new job growth would have
  been 32,492 between 1993 and 1998.

Ex 7,951 ((160,199,000/141,996,000)-1) 1,019
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A Shift-Share Example

• Calculating the IM component.

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A Shift-Share Example

• Calculating the IM component.

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A Shift-Share Example

• Calculating the IM component.

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A Shift-Share Example

• The industrial mix component of 2,737 means that
  the county has nearly 2,800 fewer jobs than it
  would have had if its structure were identical to
  the nations.

Ex 7,951 ((3,127/3,130)-1)
((160,199/141,996)-1)) -1,027
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A Shift-Share Example

• Calculating the RS component.

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A Shift-Share Example

• Calculating the RS component.

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A Shift-Share Example

• Calculating the RS component.

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A Shift-Share Example

• The regional shift component shows that 199 new
  jobs in the county are attributable to its
  relative competitive position. This is primarily
  due to its high-growth of service employment.

Ex 7,951 (((7,977/7,951)-1) -
((3,127/3,130)-1)) 34
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A Shift-Share Example

• Adding it all up
• Make sure your math is correct by adding the
  three components.
• They should total the actual change in employment
  for the region

Eir IMtir NStir RStir
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Shift Share Lab

• Calculate NS, IM, and RS for each industry and
  make sure that total employment change in the
  region is equal to the sum of the three total
  components.
• Identify the SICs with positive IM and RS values
  and among those, which ones have RSgtIM.

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