Location Quotients

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Location Quotients

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We have hotels, do we have “a lot”?
• Raleigh has hotels too?
Need context!
 𝐿𝑜𝑐𝑎𝑡𝑖𝑜𝑛 𝑄𝑢𝑜𝑡𝑖𝑒𝑛𝑡 =
𝐿𝑜𝑐𝑎𝑙 𝐸𝑚𝑝 𝑖𝑛 𝐼𝑛𝑑
𝑇𝑜𝑡𝑎𝑙 𝐿𝑜𝑐𝑎𝑙 𝐸𝑚𝑝
𝑁𝑎𝑡𝑖𝑜𝑛𝑎𝑙 𝐸𝑚𝑝 𝑖𝑛 𝐼𝑛𝑑
𝑇𝑜𝑡𝑎𝑙 𝑁𝑎𝑡𝑖𝑜𝑛𝑎𝑙 𝐸𝑚𝑝
LQ > 1  More than national average
LQ < 1  Less than national average

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Avg
Annual
Wage
Weekly
Hours
Construction $44,847 38.9
Manufacturing $81,946 40.8
Trade transport
and utilities
$34,036 34.3
Information $51,856 36.5
Financial
services
$59,316 37.4
Prof and Bus
Services
$50,300 36.2
Education and
Health Services
$43,353 32.9
Leisure and
Hospitality
$16,044 26
Other Services $26,060 31.8

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Is the LQ different from 1?
• Often difficult to tell
• Imprecise at local level
Do not consider size of firms
• One large firm doesn’t indicate a “cluster”
Often too aggregated
• i.e. types of manufacturing

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Identifying Important Industries
(see notes from class)