Regional Growth ,

Disaggregate Model
(Shift Share Analysis)
 Factors of Regional Growth

Price of
Population products and
services

Wages
Technology

Factors of
production
Availability
Income
of
distribution
resources
 Factors of Regional Growth
1. Endogenous:
from
within the region
itself (examples?

Factors of
2. Exogenous: Regional
3. Combination
from outside Growth
of
the region
both: examples?
(examples?)
 Regional Growth (Shift-share analysis)
 The approach requires an isolation of the effects of a region’s industrial structure on its
growth over a particular period of time.
 This involves the breaking down of a region’s growth performance by some representative
variables (employment, income, population) into a number of component
 The usual variable is employment
 Total regional employment growth can be separated out into ‘shift’ and ‘share’ component
 Attempts to identify some of the factors that underlie the differences in the growth &
employment performances of different regions
 Two main reasons why a region may grow at faster or slower rate than the
national average
 First, different areas poses different attractions to and conditions for industrial
development
 Second, within particular areas the mix of industries might be strongly weighted
towards the slow or fast growth type
 This procedure of separating the total shift into these two major components is the shift-
share analysis
 WHAT IS SHIFT-SHARE ANALYSIS?

 A standard regional analysis method that attempts to determine

how much of regional job growth can be attributed to (i) national

trends and how much is (ii) due to unique regional factors .

 Determines what portions of regional economic growth or decline can be

attributed to national, economic industry and regional factors.

 Question: How does this work in regional planning and regional

development?

 Why is employment growing or declining in the regional

industry, cluster, or occupation?”

 WHAT IS SHIFT-SHARE ANALYSIS?

Basic Questions
 Is the local economy growing or declining?

 Is this the best use of public funds?

 What industries should be targeted?

 How does our community compare with other communities?

- 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

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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 industry’s national

growth rate, what would be the result?”

 EUS 

t

NS  E
t1 Where:
t
t 1
1 t = current time period
ir ir  EUS  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 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  t
ir E  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

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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 region’s
competitiveness?
Perhaps the most important component
Identifies the region’s leading and lagging industries

 Eirt   EiUS 
E 
t

RS  t
ir
t1
 t1    t1 
ir  Eir   EiUS 

Where:
t = current time period t-1 = one year ago
i = specific industry r = specific region

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Thank You

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