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ABSTRACTMost applications of shift‐share analysis to regional employment change have used a study period of several years and have examined conditions only at the beginning and end years. This comparative static approach does not take into account the continuous changes in both industrial mix and size of total employment of the region over the study period. Calculating the national growth effect, the industrial mix effect, and the competitive effect on an annual basis and then summing the results over the study period provides a more accurate allocation of job changes among the three shift‐share effects. This approach, which we term dynamic shift‐share analysis, also allows unusual years and years of economic transition to he identified. We illustrate the use of dynamic shift‐share by presenting results of an analysis of New England employment growth from 1939 to 1984, using U.S. Bureau of Labor Statistics data. The use of the dynamic form of shift‐share is important when the study period is characterized by either large changes in regional industrial mix or major differences between regional and national growth rates.

AbstractShift‐share analysis is a decomposition technique widely used in regional studies to quantify an industry‐mix effect and a competitive effect on the growth of regional employment (or any other relevant variable) relative to the national average. This technique has always been subject to criticism for its lack of theoretical basis. This paper presents a critical assessment of the methods suggested by Dunn and Esteban‐Marquillas and proposes a new shift‐share method, which separates out the two effects unambiguously. By way of illustration, we provide an application to manufacturing employment in the Belgian provinces between 1995 and 2007.

ABSTRACTOne of the limitations to the widespread use of the Esteban‐Marquillas shift‐share extension has been the Stokes (1974) proof of the lack of regional additivity of the Esteban‐Marquillas competitive components. Since the Arcelus extension (1984) of the traditional shift‐share decomposition is a continuation of the logical framework by Esteban‐Marquillas (1972), the Stokes criticism would at first appear to have equal relevance to this new work. This note demonstrates that the relationship between the rate of growth of the larger region and the rates of growth of its constituent subregions is ignored in the Stokes criticism and in the subsequent critique by Beaudry and Martin (1979). By explicitly incorporating the relationship between the rate of growth of the larger region and the rates of growth of the constituent subregions, we also demonstrate that the recent shift‐share extensions by Esteban‐Marquillas and Arcelus share with the classical shift‐share decomposition the desirable additive properties under regional disaggregation of the data.

AbstractThis paper extends the traditional shift‐share model to incorporate international effects. While some industries compete nationally for markets, other compete internationally. For industries competing nationally, regional growth derives from regional superiority relative to the national economy. For those competing internationally, regional growth is tied to regional advantages from specialization and competitive advantage relative to the international economy. Building on the Esteban ‐ Marquillas concept of homothetic employment, the international shift‐share model identifies regional growth due to regional and national competitive advantage and regional and national specialization. We demonstrate that the international model retains the property of region to region additivity.