A New Shift-Share Method

Authors

  • Lionel Artige,

  • Leif van Neuss


  • Lionel Artige is an Associate Professor in Economics at HEC-University of Liège, Liège, Belgium. His e-mail address is: lionel.artige@ulg.ac.be. Leif van Neuss is a PhD Student in Economics at HEC-University of Liège, Liège, Belgium. His e-mail address is: lvneuss@ulg.ac.be. The research was funded through the ARC grant for Concerted Research Actions, financed by the French Community of Belgium. We wish to thank Bernard Lejeune for his valuable comments. Responsibility for all errors is our own.

Abstract

Shift-share analysis is a decomposition technique widely used in regional studies to quantify an industry-mix effect and a competitive effect on the growth of regional employment (or any other relevant variable) relative to the national average. This technique has always been subject to criticism for its lack of theoretical basis. This paper presents a critical assessment of the methods suggested by Dunn and Esteban-Marquillas and proposes a new shift-share method, which separates out the two effects unambiguously. By way of illustration, we provide an application to manufacturing employment in the Belgian provinces between 1995 and 2007.

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