Productivity Change in Manufacturing Regions: A Multifactor/Shift‐Share Approach

Abstract

The traditional shift-share model measures the combined effects of output growth and productivity change on employment. A region with above average employment growth either has a favorable industry mix or enjoys a competitive advantage over other regions. To separate the effects of output and productivity, the shift-share model is extended to decompose the effects of changes in output and productivity on employment. This paper modifies the Rigby-Anderson extension by separating the contribution of labor and capital to productivity growth in the analysis of regional economic performance, and investigates twenty (two-digit SIC) manufacturing sectors in twelve states (six snowbelt, six sunbelt states) to assess whether observed changes in employment were due to changes in output or to productivity.Kingsley E.

Modeling regional endogenous growth: an application to the non-metropolitan regions of Australia

“…The Haynes and Dinc (1997) method is used. Thus, in the exploratory model the summation of the regional shift component (REG_SHIF) for employment change in the one digit industry sectors derived from a shift-share for each LGAs between the 1991 and 2001 Censuses of Population and Housing becomes the dependent variable.…”

Business cycle, industrial composition, or regional advantage? A decomposition analysis of new firm formation in the United States

“…1 First proposed in 1960 (Dunn 1960), the shift-share analysis has been applied to examine employment changes (Haynes and Dinc 1997;Perloff et al 1960), migration (Plane 1987;Wright 1996), racial, gender, and other demographic changes (Franklin and Plane 2004;Smith 1991), and firm growth (Fotopoulos and Spence 2001;Johnson 2004).…”

“…This component, positive or negative, can be attributed to regional advantages or disadvantages that affect the performance of individual industries and affect firm formation in those industries (Ashby 1964;Haynes and Dinc 1997;Stevens and Moore 1980).…”

“…The criticism to the shift-share analysis centers on three issues. First, the traditional shift-share method is not able to account for labor productivity growth on employment changes across regions and industries because it measures the combined effects of output growth and productivity growth on employment (Haynes and Dinc 1997). Extensions of the traditional shift-share method have been proposed and applied to incorporate labor productivity growth and variations (e.g., Dinc et al 1998;Dinc and Haynes 2005;Ledebur and Moomaw 1983;Rigby and Anderson 1993).…”

Estimating population change with a two-category shift-share model

“…Here analysts rightfully point out that the traditional model combines together the different output growth and productivity improvements that have taken place in each of the region's industries (Rigby and Anderson 1993;Haynes and Dinc 1997;. So an industry could actually increase its output (through capital upgrades or adoption of a new technology) while seeing its employment level decline.…”