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
What is Shift-Share Analysis?
• Breaks down regional employment growth
into three components:
– National share (NS)
– Industry mix (IM)
– Regional shift (RS)
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?”
NS  E
t
ir
t 1
ir

Where:
t = current time period
i = specific industry
t
 EUS

 t 1  1
 EUS

t-1 = one year ago
r = specific region
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
IM 
t
ir
t 1
ir
E 
Where:
t = current time period
i = specific industry
t
t
 EiUS
  EUS

 t 1    t 1 
 EiUS   EUS 
t-1 = one year ago
r = specific region
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
RS 
t
ir
t 1
ir
E 
Where:
t = current time period
i = specific industry
t
 Eirt   EiUS

 t 1    t 1 
 Eir   EiUS 
t-1 = one year ago
r = specific region
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.
A Shift-Share Example
• National total employment and by major
industry sector, 1993 – 1998.
United States
1993
1998
Total Employment
141,996,000 160,199,000
Farm
3,130,000
3,127,000
Manufacturing
18,712,000 19,569,000
Retail
23,467,000 26,710,000
Finance and Real Estate
10,502,000 12,230,000
Service
41,811,000 49,898,000
All other
44,375,000 48,665,000
Change in
Jobs
18,203,000
-3,000
857,000
3,243,000
1,728,000
8,087,000
4,290,000
Percent
Change
A Shift-Share Example
• Calculate the percentage change in U.S.
total employment and by industry sector.
United States
1993
1998
Total Employment
141,996,000 160,199,000
Farm
3,130,000
3,127,000
Manufacturing
18,712,000 19,569,000
Retail
23,467,000 26,710,000
Finance and Real Estate
10,502,000 12,230,000
Service
41,811,000 49,898,000
All other
44,375,000 48,665,000
Change in
Jobs
18,203,000
-3,000
857,000
3,243,000
1,728,000
8,087,000
4,290,000
Percent
Change
12.8%
-0.1%
4.6%
13.8%
16.5%
19.3%
9.7%
A Shift-Share Example
• County total employment and by major
industry sector, 1993 – 1998.
A County
Total Employment
Farm
Manufacturing
Retail
Finance and Real Estate
Service
All other
1993
253,463
7,951
58,516
44,752
16,193
62,518
63,533
1998
283,417
7,977
61,229
50,339
18,547
75,441
69,884
Change in Percent
Jobs
Change
29,954
26
2,713
5,587
2,354
12,923
6,351
A Shift-Share Example
• Calculate the percentage change in the
county’s total employment and by industry
sector.
A County
Total Employment
Farm
Manufacturing
Retail
Finance and Real Estate
Service
All other
1993
253,463
7,951
58,516
44,752
16,193
62,518
63,533
1998
283,417
7,977
61,229
50,339
18,547
75,441
69,884
Change in Percent
Jobs
Change
29,954
11.8%
26
0.3%
2,713
4.6%
5,587
12.5%
2,354
14.5%
12,923
20.7%
6,351
10.0%
A Shift-Share Example
• 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 =
A Shift-Share Example
• Calculating the NS component.
1993
U.S.
National
Industry
County Emp Growth Rate Growth Share
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 =
A Shift-Share Example
• 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
Industry
County Emp Growth Rate Growth Share
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
A Shift-Share Example
• Calculating the IM component.
Industry's
1993
National
Industry
County Emp Growth Rate
Farm
7,951
Manufacturing
58,516
Retail
44,752
Finance and Real Estate
16,193
Service
62,518
All other
63,533
County Industry Mix Share =
U.S.
Growth Rate
Industry Mix
Share
A Shift-Share Example
• Calculating the IM component.
1993
Industry
County Emp
Farm
7,951
Manufacturing
58,516
Retail
44,752
Finance and Real Estate
16,193
Service
62,518
All other
63,533
County Industry Mix Share =
Industry's
National
U.S.
Growth Rate Growth Rate
-0.1%
4.6%
13.8%
16.5%
19.3%
9.7%
Industry Mix
Share
A Shift-Share Example
• Calculating the IM component.
1993
Industry
County Emp
Farm
7,951
Manufacturing
58,516
Retail
44,752
Finance and Real Estate
16,193
Service
62,518
All other
63,533
County Industry Mix Share =
Industry's
National
U.S.
Industry Mix
Growth Rate Growth Rate
Share
-0.1%
12.8%
4.6%
12.8%
13.8%
12.8%
16.5%
12.8%
19.3%
12.8%
9.7%
12.8%
A Shift-Share Example
• 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.
1993
Industry
County Emp
Farm
7,951
Manufacturing
58,516
Retail
44,752
Finance and Real Estate
16,193
Service
62,518
All other
63,533
County Industry Mix Share =
Industry's
National
U.S.
Industry Mix
Growth Rate Growth Rate
Share
-0.1%
12.8%
-1,027
4.6%
12.8%
-4,821
13.8%
12.8%
448
16.5%
12.8%
589
19.3%
12.8%
4,078
9.7%
12.8%
-2,002
-2,737
Ex: 7,951 * ((3,127/3,130)-1) – ((160,199/141,996)-1)) = -1,027
A Shift-Share Example
• Calculating the RS component.
County's
1993
Industry
Industry
County Emp Growth Rate
Farm
7,951
Manufacturing
58,516
Retail
44,752
Finance and Real Estate
16,193
Service
62,518
All other
63,533
County Local Share =
Industry's
National
Growth Rate
Regional
Shift
A Shift-Share Example
• Calculating the RS component.
1993
Industry
County Emp
Farm
7,951
Manufacturing
58,516
Retail
44,752
Finance and Real Estate
16,193
Service
62,518
All other
63,533
County Local Share =
County's
Industry's
Industry
National
Growth Rate Growth Rate
0.3%
4.6%
12.5%
14.5%
20.7%
10.0%
Regional
Shift
A Shift-Share Example
• Calculating the RS component.
1993
Industry
County Emp
Farm
7,951
Manufacturing
58,516
Retail
44,752
Finance and Real Estate
16,193
Service
62,518
All other
63,533
County Local Share =
County's
Industry's
Industry
National
Growth Rate Growth Rate
0.3%
-0.1%
4.6%
4.6%
12.5%
13.8%
14.5%
16.5%
20.7%
19.3%
10.0%
9.7%
Regional
Shift
A Shift-Share Example
• 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.
1993
Industry
County Emp
Farm
7,951
Manufacturing
58,516
Retail
44,752
Finance and Real Estate
16,193
Service
62,518
All other
63,533
County Local Share =
County's
Industry's
Industry
National
Growth Rate Growth Rate
0.3%
-0.1%
4.6%
4.6%
12.5%
13.8%
14.5%
16.5%
20.7%
19.3%
10.0%
9.7%
Regional
Shift
34
33
-597
-310
831
209
199
Ex: 7,951 * (((7,977/7,951)-1) - ((3,127/3,130)-1)) = 34
A Shift-Share Example
• 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
ir

t 1
ir

NS  E
t
ir
IM  E
t
ir
RS  E
t
ir
t 1
ir

t
 EUS

 t 1  1
 EUS

t
t
 EiUS
  EUS

 t 1    t 1 
 EiUS   EUS 
t
 Eirt   EiUS

 t 1    t 1 
 Eir   EiUS 