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Shift-Share Analysis (Mix and Share Analysis) : Chapter 7, Pages 67-73 in Textbook
Shift-Share Analysis (Mix and Share Analysis) : Chapter 7, Pages 67-73 in Textbook
t 1 EUS
t
NS E
t
ir ir t 1 1
EUS
Where:
t = current time period t-1 = one year ago
i = specific industry r = specific region
What is Shift-Share Analysis?
Industry Mix (IM) Component
How much growth can be attributed to the region’s 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
EiUS
t
EUS t
IM E t
ir
t 1
ir t 1 t 1
EiUS EUS
Where:
t = current time period t-1 = one year ago
i = specific industry r = specific region
What is Shift-Share Analysis?
Regional Shift (RS) Component
How many jobs are created/not created as a result of the region’s
competitiveness?
Perhaps the most important component
Identifies the region’s leading and lagging industries
Eirt EiUS
RS Eirt 1
t
t
ir t 1 t 1
Eir EiUS
Where:
t = current time period t-1 = one year ago
i = specific industry r = specific region
A Shift-Share Example
Compare a county to the U.S. economy.
We’ll 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.
A Shift-Share Example
National total employment and by major industry
sector, 1993 – 1998.
United States Change in Percent
1993 1998 Jobs Change
Total Employment 141,996,000 160,199,000 18,203,000
Farm 3,130,000 3,127,000 -3,000
Manufacturing 18,712,000 19,569,000 857,000
Retail 23,467,000 26,710,000 3,243,000
Finance and Real Estate 10,502,000 12,230,000 1,728,000
Service 41,811,000 49,898,000 8,087,000
All other 44,375,000 48,665,000 4,290,000
A Shift-Share Example
Calculate the percentage change in U.S. total
employment and by industry sector.
United States Change in Percent
1993 1998 Jobs Change
Total Employment 141,996,000 160,199,000 18,203,000 12.8%
Farm 3,130,000 3,127,000 -3,000 -0.1%
Manufacturing 18,712,000 19,569,000 857,000 4.6%
Retail 23,467,000 26,710,000 3,243,000 13.8%
Finance and Real Estate 10,502,000 12,230,000 1,728,000 16.5%
Service 41,811,000 49,898,000 8,087,000 19.3%
All other 44,375,000 48,665,000 4,290,000 9.7%
A Shift-Share Example
County total employment and by major industry
sector, 1993 – 1998.
Industry's
1993 National U.S. Industry Mix
Industry County Emp Growth Rate Growth Rate Share
Farm 7,951
Manufacturing 58,516
Retail 44,752
Finance and Real Estate 16,193
Service 62,518
All other 63,533
County Industry Mix Share =
A Shift-Share Example
Calculating the IM component.
Industry's
1993 National U.S. Industry Mix
Industry County Emp Growth Rate Growth Rate Share
Farm 7,951 -0.1%
Manufacturing 58,516 4.6%
Retail 44,752 13.8%
Finance and Real Estate 16,193 16.5%
Service 62,518 19.3%
All other 63,533 9.7%
County Industry Mix Share =
A Shift-Share Example
Calculating the IM component.
Industry's
1993 National U.S. Industry Mix
Industry County Emp Growth Rate Growth Rate Share
Farm 7,951 -0.1% 12.8%
Manufacturing 58,516 4.6% 12.8%
Retail 44,752 13.8% 12.8%
Finance and Real Estate 16,193 16.5% 12.8%
Service 62,518 19.3% 12.8%
All other 63,533 9.7% 12.8%
County Industry Mix Share =
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 nation’s.
Industry's
1993 National U.S. Industry Mix
Industry County Emp Growth Rate Growth Rate Share
Farm 7,951 -0.1% 12.8% -1,027
Manufacturing 58,516 4.6% 12.8% -4,821
Retail 44,752 13.8% 12.8% 448
Finance and Real Estate 16,193 16.5% 12.8% 589
Service 62,518 19.3% 12.8% 4,078
All other 63,533 9.7% 12.8% -2,002
County Industry Mix Share = -2,737
County's Industry's
1993 Industry National Regional
Industry County Emp Growth Rate Growth Rate Shift
Farm 7,951
Manufacturing 58,516
Retail 44,752
Finance and Real Estate 16,193
Service 62,518
All other 63,533
County Local Share =
A Shift-Share Example
Calculating the RS component.
County's Industry's
1993 Industry National Regional
Industry County Emp Growth Rate Growth Rate Shift
Farm 7,951 0.3%
Manufacturing 58,516 4.6%
Retail 44,752 12.5%
Finance and Real Estate 16,193 14.5%
Service 62,518 20.7%
All other 63,533 10.0%
County Local Share =
A Shift-Share Example
Calculating the RS component.
County's Industry's
1993 Industry National Regional
Industry County Emp Growth Rate Growth Rate Shift
Farm 7,951 0.3% -0.1%
Manufacturing 58,516 4.6% 4.6%
Retail 44,752 12.5% 13.8%
Finance and Real Estate 16,193 14.5% 16.5%
Service 62,518 20.7% 19.3%
All other 63,533 10.0% 9.7%
County Local Share =
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.
County's Industry's
1993 Industry National Regional
Industry County Emp Growth Rate Growth Rate Shift
Farm 7,951 0.3% -0.1% 34
Manufacturing 58,516 4.6% 4.6% 33
Retail 44,752 12.5% 13.8% -597
Finance and Real Estate 16,193 14.5% 16.5% -310
Service 62,518 20.7% 19.3% 831
All other 63,533 10.0% 9.7% 209
County Local Share = 199
Ex: 7,951 * (((7,977/7,951)-1) - ((3,127/3,130)-1)) = 34
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
Eirt EiUS
RS E
t
t 1
t
ir ir t 1 t 1
Eir EiUS