Shift and share slides for dist

1. How to Analyze Changes
in Local Industries
Shift-Share Analysis

2. Shift Share Analysis
• Thinking about local growth
– US growing  we should grow…
– Wilmington:
• Strong in L&H
• Weak in manufacturing
• Wont grow the same as US…
– But people moving to town…
• Decompose growth to identify patterns
• Roughly:
– Local = National + Industry diff. + Diff.
Regional Rate

3. Shift-and-Share Analysis
• Shift and Share Analysis
– Divides growth into three
components
• National growth component – growth at
national rate
– If region grows at national rate, maintains its
“share”
• Mix component – growth difference owing
to differences in initial employment mix
• Competitive component – differences due
to local environment, i.e. permitting,
infrastructure, etc.
– Industry “shifting” to new region

4. Shift and Share
For a single industry

7. Shift and Share
Example…

10. Shift-Share Critique
• Data fairly available
• But:
– Local industry may differ from
national even for a specific sector
• Maybe the national level isn’t right
benchmark
– Difficult to select appropriate
industry level
• All manufacturing or a specific type…
–i.e. all food processing or only smoked
fish
–If one plant is industry  local = national

11. Shift-Share Critique
• Data fairly available
• But:
– Competitive component can change
quickly
– Past performance may not match future
• Difficult to identify cause (regulations,
infrastructure, employee at firm, etc.)