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The Repeated Application of Shift-Share: A Structural Explanation of Regional Growth?

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  • D R Holden
  • J K Swales
  • A G M Nairn

    (Economic Services Division, Scottish Development Agency, 120 Bothwell Street, Glasgow G2 7JP, Scotland)

Abstract

The views put forward by Fothergill and Gudgin that structural factors account for variation in the growth rates of UK regions, and that such structural factors are identified by the repeated application of shift-share are examined. First, the conditions under which the growth rate of a region can be said to be structurally determined are considered. These conditions are not only restrictive, but are also at odds with the expressed views of those who support such a theory. Second, it is shown that, even if the identified conditions hold, the repeated application of the shift-share technique will lead, in general, to an incorrect measure of the importance of these structural factors. An accurate simple procedure is given as an alternative to shift-share in these circumstances. Last, analysis of variance is considered and it is shown that the assumptions required for this technique to be appropriate are essentially the same as those required for the regional growth rate to be structurally determined. Although the use of analysis of variance is not advocated, it is suggested that it is incorrect for shift-share to be portrayed as a superior alternative.

Suggested Citation

  • D R Holden & J K Swales & A G M Nairn, 1987. "The Repeated Application of Shift-Share: A Structural Explanation of Regional Growth?," Environment and Planning A, , vol. 19(9), pages 1233-1250, September.
    • Handle: RePEc:sae:envira:v:19:y:1987:i:9:p:1233-1250
    DOI: 10.1068/a191233
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    References listed on IDEAS

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    1. Boland, Lawrence A, 1979. "A Critique of Friedman's Critics," Journal of Economic Literature, American Economic Association, vol. 17(2), pages 503-522, June.
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    1. G Fotopoulos & N Spence, 1999. "Spatial Variations in Net Entry Rates of Establishments in Greek Manufacturing Industries: An Application of the Shift-Share ANOVA Model," Environment and Planning A, , vol. 31(10), pages 1731-1755, October.
    2. Stephen Roper & Nola Hewitt-Dundas, 2006. "International Innovation Comparisons: Insight or Illusion?," Environment and Planning C, , vol. 24(3), pages 385-401, June.
    3. Daniel J. Graham Shaw & Nigel Spence, 1998. "A Productivity Growth Interpretation of the Labour Demand Shift-Share Model," Regional Studies, Taylor & Francis Journals, vol. 32(6), pages 515-525, August.
    4. Selting, Anne C. & Loveridge, Scott, 1992. "A Summary Of The Literature On Shift-Share Analysis," Staff Papers 14086, University of Minnesota, Department of Applied Economics.
    5. L van der Laan, 1996. "A Review of Regional Labour Supply and Demand Forecasting in the European Union," Environment and Planning A, , vol. 28(12), pages 2105-2123, December.
    6. D C Knudsen & R Barff, 1991. "Shift-Share Analysis as a Linear Model," Environment and Planning A, , vol. 23(3), pages 421-431, March.
    7. Knudsen, Daniel C., 2000. "Shift-share analysis: further examination of models for the description of economic change," Socio-Economic Planning Sciences, Elsevier, vol. 34(3), pages 177-198, September.

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