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

What is Shift-Share Analysis?
 One way to account for a region’s competitiveness
 Provides a picture of how well a region’s mix of
industries is performing
 Also, shows how well individual industries are
doing
 Can be used to analyze individual industries or the
whole economy
 Breaks down regional employment growth into
three components:
 National share (NS)
 Industry mix (IM)
 Regional shift (RS)
 National Share (NS) Component
 Share of regional job growth attributable to growth of the national
economy
 “If the regional industry grew at the industry’s national growth rate,
what would be the result?”
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
 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:
 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:
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.
 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
 Calculate the percentage change in U.S. total
employment and by industry sector.
United States Change in Percent
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%
 County total employment and by major industry
sector, 1993 – 1998.
A County Change in Percent

Total Employment 253,463 283,417 29,954
Farm 7,951 7,977 26
Manufacturing 58,516 61,229 2,713
Retail 44,752 50,339 5,587
Finance and Real Estate 16,193 18,547 2,354
Service 62,518 75,441 12,923
All other 63,533 69,884 6,351
 Calculate the percentage change in the county’s
total employment and by industry sector.
A County Change in Percent
Total Employment 253,463 283,417 29,954 11.8%
Farm 7,951 7,977 26 0.3%
Manufacturing 58,516 61,229 2,713 4.6%
Retail 44,752 50,339 5,587 12.5%
Finance and Real Estate 16,193 18,547 2,354 14.5%
Service 62,518 75,441 12,923 20.7%
All other 63,533 69,884 6,351 10.0%
 Calculating the NS component.
1993 U.S. National

Industry County Emp Growth Rate Growth Share
Farm 7,951
Manufacturing 58,516
Retail 44,752
Finance and Real Estate 16,193
Service 62,518
All other 63,533
County National Growth Share =
 Calculating the NS component.
1993 U.S. National

Farm 7,951 12.8%
Manufacturing 58,516 12.8%
Retail 44,752 12.8%
Finance and Real Estate 16,193 12.8%
Service 62,518 12.8%
All other 63,533 12.8%
County National Growth Share =
 If the county’s industries grew at the overall national rate of
growth new job growth would have been 32,492 between 1993
and 1998.
1993 U.S. National
Farm 7,951 12.8% 1,019
Manufacturing 58,516 12.8% 7,501
Retail 44,752 12.8% 5,737
Finance and Real Estate 16,193 12.8% 2,076
Service 62,518 12.8% 8,014
All other 63,533 12.8% 8,145
County National Growth Share = 32,492
Ex: 7,951 * ((160,199,000/141,996,000)-1) = 1,019

 Calculating the IM component.
Industry's
1993 National U.S. Industry Mix
Industry County Emp Growth Rate Growth Rate Share
Farm 7,951
Retail 44,752
Service 62,518
All other 63,533
County Industry Mix Share =
Industry's
Farm 7,951 -0.1%
Retail 44,752 13.8%
Service 62,518 19.3%
All other 63,533 9.7%
Industry's
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%
 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
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
Ex: 7,951 * ((3,127/3,130)-1) – ((160,199/141,996)-1)) = -1,027

 Calculating the RS component.
County's Industry's
1993 Industry National Regional
Industry County Emp Growth Rate Growth Rate Shift
Farm 7,951
Retail 44,752
Service 62,518
All other 63,533
County Local Share =
County's Industry's
Farm 7,951 0.3%
Retail 44,752 12.5%
Service 62,518 20.7%
All other 63,533 10.0%
County's Industry's
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%
 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
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
 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

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 RS>IM.
t 1  EUS
t

NS  E
t
ir ir   t 1  1
 EUS 
 EiUS
t
  EUS t

IM  E
t
ir
t 1
ir   t 1    t 1 
 EiUS   EUS 
 Eirt   EiUS 
RS  E
t
t 1

t
ir ir  t 1    t 1 
 Eir   EiUS 

Shift-Share Analysis (Mix and Share Analysis) : Chapter 7, Pages 67-73 in Textbook

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Shift-Share Analysis (Mix and Share Analysis) : Chapter 7, Pages 67-73 in Textbook

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Shift-Share Analysis

(Mix and Share Analysis)

Chapter 7, pages 67-73 in textbook

A County Change in Percent

1993 U.S. National

1993 U.S. National

Ex: 7,951 * ((160,199,000/141,996,000)-1) = 1,019

Ex: 7,951 * ((3,127/3,130)-1) – ((160,199/141,996)-1)) = -1,027

Eir = IMtir + NStir + RStir

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