The Impact of Output and Productivity Changes on Manufacturing Employment

Abstract

Traditional univariate shift-share studies of employment provide an unreliable indicator of the relative performance of a region or an industry for they fail to separate the effects of output and productivity change on the demand for labor. An extended shift-share model is proposed that overcomes this weakness and permits identification of different processes of regional development. This model is used to investigate annual employment change in twenty (two-digit SIC) manufacturing industries in nine census regions of the U.S. between 1950 and 1986. The timing and depth of the exodus of manufacturing jobs from the snowbelt to the sunbelt is illustrated along with the business cycle performance of industries and regions. Productivity growth in the sunbelt is positively associated with rapid output expansion, whereas in the snowbelt it is associated with the loss of market share and economic rationalization. HE MOVEMENT OF JOBS AND CAPITAL from the traditional manufac-T turing heartland of the U.S. towards the south and west of the country is one manifestation of the changing geography of North American manufacturing. Whether seen as an early stage of the crisis of postwar profitability and the attendant search for solutions (Peet 1983), an intermediate stage in the new international division of labor (Hansen 1988), or the end product of technological change and the development of new industrial spaces (Norton and Rees 1979; Hall and Markusen 1985; Scott 1988), the industrial and regional restructuring of the U.S. economy has exerted profound effects on communities throughout the nation (Bluestone and Harrison 1982).

Investment, Capital Stocks and the Age of Capital in U.S. Regions

“…Rather, the proportion of national capital stocks located in different census regions has changed only gradually and the trends observed are evident as early as the 1950s. These results accord closely with the spatial and temporal shifts of manufacturing jobs in the U.S. economy (Rigby 1992). Tables 1 and 2 show that substantial changes in the regional distribution of industrial capital have occurred since 1955.…”

Dynamic Externalities and Regional Manufacturing Development In Poland

“…Loveridge and Selting have reviewed the position of the classic shift-share model, and found its performance is in general better than more sophisticated homothetic specifications (1998). Further, Rigby (1992) has extended shift-share analysis to take account of the fact that regional shift can be confounded by regionally differential changes in productivity by sector, and used it to study annual employment change in two-digit sectors for the nine US census regions. Using trade data in addition to employment, Hayward and Erickson (1995) and Noponen et al (1996) partition changes in regional output by sector to take into account imports and exports, despite difficulties with the data sets used.…”

Is There a Trade and Defense Perimeter? The Regional Impacts of Trade and Defense Spending in the United States, 1978‐1986

“…6. See Rigby 1992, for a discussion and estimates of output and productivity changes in manufacturing by region, using 2-digit manufacturing sectors. Rigby uses value added and hours worked rather than output and employment.…”