Edited by Charlie Karlsson, Martin Andersson and Therese Norman
The shift-share method is a commonly used decomposition technique in the economic analysis of smaller regions that are embedded in larger regional systems. This methodology assumes that smaller regions – counties and municipalities – are parts of larger regions – states and provinces (or if states or provinces are the smaller regions, then they are part of countries and nations) – and these generally follow the trends of the growth indices, such as employment, population, industrial sectors and housing price, experienced by the larger regions in which they are embedded. A version of the shift-share method was first introduced by J.H. Jones in 1940 in the Report of the Royal Commission on the Distribution of the Industrial Population (Lamarche et al., 2003). The Royal Commission inquired into the causes and direction of geographical distribution of industries in the UK. It used this method to examine the difference between regional and national employment growth rates. Later, Creamer (1942) used shift-share to measure, describe and explain the distribution of US manufacturing employment between 1929 and 1937. Dunn used a variant of shift-share in an extensive analysis of the regional distribution of economic activities in the USA (Perloff et al., 1960).
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