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Regional Analysis Methods. Benchmarking, Location Quotients, Shift-share. Agenda. Review Shift-Share What is it? How do you do it? What does it mean? Tools for interpreting Cautions and limits Multipliers Policy Map?. First Assignment – Q1.

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regional analysis methods

Regional Analysis Methods

Benchmarking, Location Quotients, Shift-share

  • Review
  • Shift-Share
    • What is it?
    • How do you do it?
    • What does it mean?
      • Tools for interpreting
    • Cautions and limits
  • Multipliers
  • Policy Map?
first assignment q1
First Assignment – Q1
  • What was the population of Allegheny County in 2000 and 2004 (Census or BEA)? 
    • 2000: 1,279,817 (BEA - REIS or Census July 1est.)
    • or 2000: 1,281,666 (Census 2000 (SF1) - April 1 estimate)
    • 2004: 1,247,512 (BEA-REIS)
first assignment q2 4
First Assignment Q2-4
  • How many total jobs were available in Allegheny County in 2004?
    • 861,868 (BEA total employment)
  • How many Allegheny County residents were employed in 2004?
    • 604,203 (BLS, CPS/LAUS)
  • What was the total "covered" employment in 2004?
    • 685,878 (BLS, QCEW)
second assignment i
Second Assignment - I
  • When you are benchmarking one region against another, there are many factors to consider in the selection of an appropriate benchmark.  Name two (2):
  • If you are studying a region with dynamic annual changes, what is the best method to calculate the growth rates?
  • You should never use a location quotient for what purpose?
second assignment part 2
 Second Assignment Part 2
  • There a several considerations for interpreting a location quotient.  Name two (2): 
  •  What is the difference between a firm and an establishment?
location quotients







Location Quotients



shift share
  • What are the 3 components of a shift-share analysis?
  • A competitive industry is defined as WHAT?
  • Explain
    • National share
    • Industry Mix
    • Regional Shift
  • What are the limits of shift-share?
albuquerque 1970 1990
Albuquerque, 1970-1990
  • 127 % total employment growth
  • +190,000 Jobs
  • What explains this growth?
three factors
Three factors…
  • Growth of the national economy
  • Presence of growth industries (or declining ones)
  • Local competitive factors

Diff btw US & actual ch.

brief glossary
Brief Glossary
  • R = actual regional change
  • N = change due to national growth
  • M = Industry mix effect
  • S = regional shift effect
growth of the u s economy
Growth of the U.S. Economy
  • If Alb had grown at the U.S. rate, it would have added 83,770 jobs.
  • The growth of the U.S. economy accounted for 83,770, or 44% of the actual change.
  • Alb in fact added more than 191,000 jobs – so something else must explain the region’s growth
the mix of industries in the region
The mix of industries in the region
  • The presence of growth industries were not a major factor in the region’s performance. Growth industries on the whole accounted for 8% of the actual change, which equaled 14,595 jobs.
  • Must add jobs faster than the nation as a whole to have a positive Mix effect
local competitive factors
Local competitive factors
  • The shift-share analysis estimates that 49% of the growth in employment is the result of local competitive conditions.
  • 93, 263 of the jobs created in Albuquerque were due to these local advantages
  • These advantages were spread across every industry but one – Mining.
what are the key industries

What are the key industries?

We can combine statistics on economic growth, the shift-share, and specialization (LQs) to highlight leading and lagging industries.

finding key industries

Not CompetitiveCompetitive

Identify the



Fix them if possible



Develop the value chain -

Buyers & Supplier


Prepare for transition

Manage decline

Do nothing

Watch the market

Minimize investment


Finding Key Industries
state and local gov
State and Local Gov
  • It is a large industry in the region with considerable growth.
  • It is not a growth industry nationally – but this industry does not move on strictly national dynamics.
  • It is a desirable goal to growth this industry?
  • Still somewhat small – only 7% of regional employment, less then 27,000 employees.
  • Potential emerging sector in the region, but the sector is declining nationally
    • Can Alb capture more of this industry and for how long?
    • Are there subsectors in which the region has a concentration and an advantage that are growing?
  • Employment in Services accounts for 25% of the region’s employment (comparable to the US share).
  • The industry grew by 70,000 jobs in the region (190%), well above national and industry growth
  • Local factors were positive, but contributed less to the growth than national and industry factors.
the level of industry detail impacts the shift share analysis
The level of industry detail impacts the shift-share analysis
  • More detail increases the accuracy of the industry mix effect and the local shift.
the time frame impacts the shift share
The time frame impacts the shift-share
  • If the industry structure changes dramatically then a longer time frame distorts the industry mix effect.
strategies for missing data
Strategies for missing data
  • Ignore it
  • Find an alternative source
  • Estimate missing midpoint data with an average or linear projection
  • Use the proportion of the industry from a higher level of geography
  • Project the missing data based on regional growth
  • Project the missing data based on national industry growth
comparing the 3 solutions to missing data
Comparing the 3 "Solutions" to missing data

1 – estimate nondisclosed data

2 – ignore nondisclosed data or assume = 0

3 – exclude missing sectors entirely

  • What is a multiplier?
    • Based on industry input-output
  • How do you use them correctly
    • Change in final demand
    • Substitution
    • Total vs. direct vs. indirect jobs
  • Sources
    • RIMS II
    • IMPLAN
    • REMI