The Shift-Share Regression: An Application to Regional Employ-ment Development
This paper presents an outline of the so-called Shift-Share Regression and an application of this method to the analysis of employment development. The method used is not a deterministic decomposition such as the classical Shift-Share-Analysis, but a powerful, yet simple and flexible econometric tool to test theory-related hypotheses, which can be applied as a ?work-horse? in studies of many kinds. Classical deterministic Shift-Share-Analysis has often been criticised, since it does not permit a model-based analysis. The detection of causal effects is at least problematic and the inclusion of additional explanatory variables is possible only in special cases. A major problem is the nature of the method as a deterministic procedure which excludes significance tests. Shift-Share Regression is able to overcome all these critical points. In a basic version it was introduced by Patterson (1991) as a method for analysing and testing regional industrial developments. In contrary to the deterministic Shift-Share-Analysis employment development was examined in a linear model. In Patterson?s analysis the industrial sector structure was used as the sole determining factor alongside the location effects and the national trend. We extend this basic structure further: In our case, the effects of sectoral structures, establishment size, qualification structures and locational determinants on employment growth are studied. The regional units used are districts of Western Germany (?Landkreise? and ?kreisfreie StÃ¤dte?), especially in the present context the districts of the federal State of Bavaria. The analysis is motivated by theoretical considerations of different sources. The most important one refers to theoretical analyses of structural change. According to a specific theorem, the employment effect of technological progress depends on the elasticity of product demand. If demand is inelastic the direct labour saving effect of technological progress is dominating and the effect is negative. Then it is profitable for a firm to reduce its labour force. If, however, demand is elastic a compensating effect dominates. In this case price decreases following higher productivity lead to an extension of product demand which (over-)comÂ¬pensates the direct labour saving effect. Then, it is profitable for a firm to increase the size of its labour force. It can be assumed that in different industries of an economy different demand elasticities are dominating. Therefore, an empirical analysis of employment effects should focus on the industries of an economy. In the paper the sources of different regional employment development in Bavaria are presented, analysed by Shift-Share Regression.
|Date of creation:||Nov 2013|
|Date of revision:|
|Contact details of provider:|| Postal: |
Web page: http://www.ersa.org
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Uwe Blien & Katja Wolf, 2002.
"Regional development of employment in eastern Germany: an analysis with an econometric analogue to shift-share techniques,"
Papers in Regional Science,
Springer, vol. 81(3), pages 391-414.
- Blien, Uwe & Wolf, Katja, 2002. "Regional development of employment in eastern Germany. An analysis with an econometric analogue to shift-share techniques," ERSA conference papers ersa02p263, European Regional Science Association.
- Ulrich Zierahn, 2010.
"The Importance of Spatial Autocorrelation for Regional Employment Growth in Germany,"
MAGKS Papers on Economics
201031, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
- Ulrich Zierahn, 2012. "The importance of spatial autocorrelation for regional employment growth in Germany," Review of Regional Research, Springer, vol. 32(1), pages 19-43, March.
- Ulrich Zierahn, 2011. "The importance of spatial autocorrelation for regional employment growth in Germany," ERSA conference papers ersa10p205, European Regional Science Association.
- Federico Cingano & Fabiano Schivardi, 2004.
"Identifying the Sources of Local Productivity Growth,"
Journal of the European Economic Association,
MIT Press, vol. 2(4), pages 720-742, 06.
- Federico Cingano & Fabiano Schivardi, 2003. "Identifying the Sources of Local Productivity Growth," Temi di discussione (Economic working papers) 474, Bank of Italy, Economic Research and International Relations Area.
- Daron Acemoglu, 2000.
"Technical Change, Inequality, and the Labor Market,"
NBER Working Papers
7800, National Bureau of Economic Research, Inc.
- Daron Acemoglu, 2002. "Technical Change, Inequality, and the Labor Market," Journal of Economic Literature, American Economic Association, vol. 40(1), pages 7-72, March.
- Blien, Uwe & Sanner, Helge, 2006.
"Structural change and regional employment dynamics,"
IAB Discussion Paper
200606, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
- Helge Sanner & Uwe Blien, 2006. "Structural Change and Regional Employment Dynamics," ERSA conference papers ersa06p699, European Regional Science Association.
- Uwe Blien & Helge Sanner, 2006. "Structural change and regional employment dynamics," Volkswirtschaftliche Diskussionsbeiträge 82, Universität Potsdam, Wirtschafts- und Sozialwissenschaftliche Fakultät.
- Jens Suedekum & Uwe Blien, 2007. "Stimulating Employment Growth with Higher Wages? A New Approach to Addressing an Old Controversy," Kyklos, Wiley Blackwell, vol. 60(3), pages 441-464, 08.
- Simonetta Longhi & Peter Nijkamp & Iulia Traistaru, 2005. "Is Sectoral Diversification a Solution to Unemployment? Evidence from EU Regions," Kyklos, Wiley Blackwell, vol. 58(4), pages 591-610, November.
- Greene, William H & Seaks, Terry G, 1991. "The Restricted Least Squares Estimator: A Pedagogical Note," The Review of Economics and Statistics, MIT Press, vol. 73(3), pages 563-67, August.
- Blien, Uwe & Suedekum, Jens & Wolf, Katja, 2005.
"Local Employment Growth in West Germany: A Dynamic Panel Approach,"
IZA Discussion Papers
1723, Institute for the Study of Labor (IZA).
- Blien, Uwe & Suedekum, Jens & Wolf, Katja, 2006. "Local employment growth in West Germany: A dynamic panel approach," Labour Economics, Elsevier, vol. 13(4), pages 445-458, August.
- Uwe Blien & Jens Suedekum & Katja Wolf, 2005. "Local Employment Growth in West Germany - A Dynamic Panel Approach," ERSA conference papers ersa05p620, European Regional Science Association.
- Edward L. Glaeser & Joshua D. Gottlieb, 2009.
"The Wealth of Cities: Agglomeration Economies and Spatial Equilibrium in the United States,"
NBER Working Papers
14806, National Bureau of Economic Research, Inc.
- Edward L. Glaeser & Joshua D. Gottlieb, 2009. "The Wealth of Cities: Agglomeration Economies and Spatial Equilibrium in the United States," Journal of Economic Literature, American Economic Association, vol. 47(4), pages 983-1028, December.
- D C Knudsen & R Barff, 1991. "Shift-Share Analysis as a Linear Model," Environment and Planning A, , vol. 23(3), pages 421-431, March.
- repec:oup:qjecon:v:118:y:2003:i:4:p:1279-1333 is not listed on IDEAS
- D C Knudsen & R Barff, 1991. "Shift - share analysis as a linear model," Environment and Planning A, Pion Ltd, London, vol. 23(3), pages 421-431, March.
- Oliver Farhauer & Alexandra Kröll, 2012. "Diversified specialisation—going one step beyond regional economics’ specialisation-diversification concept," Review of Regional Research, Springer, vol. 32(1), pages 63-84, March.
- Wolfgang Dauth, 2013. "Agglomeration and regional employment dynamics," Papers in Regional Science, Wiley Blackwell, vol. 92(2), pages 419-435, 06.
- Shu-hen Chiang, 2012. "Shift-share analysis and international trade," The Annals of Regional Science, Springer, vol. 49(3), pages 571-588, December.
- Julia Kowalewski, 2011. "Specialization and employment development in Germany: An analysis at the regional level," Papers in Regional Science, Wiley Blackwell, vol. 90(4), pages 789-811, November.
When requesting a correction, please mention this item's handle: RePEc:wiw:wiwrsa:ersa13p614. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Gunther Maier)
If references are entirely missing, you can add them using this form.