Shift share analysis is a traditional tool; through a descriptive analysis of the productive structure, it allows the comparison of regional differences within a country, region or state (SIMÕES, 2004).Shift-share analysis is one way to account for the competitiveness of a region's industries and to analyze the local economic base. This analysis is primarily used to decompose employment changes within an economy over a specific period of time into mutually exclusive factors. Like other analytical economic tools, the shift-share technique is only a descriptive tool that should be used in combination with other analysis to provide a summary of a region's key employment potential industries.

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Shift Share Analysis
Shift share analysis is a traditional tool; through a descriptive analysis of the productive
structure, it allows the comparison of regional differences within a country, region or state
(SIMÕES, 2004).Shift-share analysis is one way to account for the competitiveness of a region's
industries and to analyze the local economic base. This analysis is primarily used to decompose
employment changes within an economy over a specific period of time into mutually exclusive
factors. Like other analytical economic tools, the shift-share technique is only a descriptive tool
that should be used in combination with other analysis to provide a summary of a region's key
employment potential industries.
Variables
The shift-share analysis divides the change in local industry employment into three components:
• National Growth Share - The share of local job growth that can be attributed to growth of the
national economy. Specifically, if the nation as a whole is experiencing employment growth, ("a
rising tide lifts all boats"), one would expect total national growth to exert a positive growth
influence on the local area. This factor describes the change that would be expected simply by
virtue of the fact that the local area is part of a changing national economy. In the analysis, we
first examine the national growth share, or the number of jobs lost or gained in a region if total
employment in the region had changed at the same rate as overall total national employment.
• Industrial Mix/Proportionality Shift - The share of local job growth that can be attributed to
the region's mix of industries being analyzed. This second factor is the change in a local industry
that would be attributable to the growth or decline of the industry nationally. This component
isolates the fact that nationwide, some industries have grown faster or slower than others. It
represents the contribution that a specific industry nationally has made to the change in the
number of jobs in the region.
• Local share/Regional Shift/Differential Shift - This share of local job growth describes the
extent to which factors unique to the local area have caused growth or decline in regional
employment of an industrial group. We observe that even during periods of general prosperity,
some regions and still some industries grow faster than others do. This is usually attributed to
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some local comparative advantage such as natural resources, linked industries, or favorable local
labor situations. The local component aids in identifying a local area's economic strengths. This
element of the analysis is a representation of how a region's competitive position can contribute
to regional job growth. Shift-share and the local share component in particular, can point to
industries that enjoy local comparative advantage. It cannot, however identify what the actual
comparative advantage is.
Formula
Formula of shift share analysis is
SS = NS + IM + RS
WhereSS = Shift-Share
NS = National Share
IM = Industry Mix
RS = Regional Shift
The equations for each component are
t-1
t
t-1
NS= ilocal * US /US
t-1
t
t-1
IM = (ilocal *iUS /iUS ) - NS
t-1
t
t-1
t
t-1
RS =ilocal *( ilocal /ilocal - iUS /iUS )
Where
ilocal
t-1
ilocal
t
= number of local jobs in an industry (i) at the beginning of the analysis period (t-1)
= number of local jobs in an industry (i) at the end of the analysis period (t)
USt-1 = total number of jobs in the nation at the beginning of the analysis period (t-1)
USt = total number of jobs in the nation at the end of the analysis period (t)
t-1
iUS =
t
iUS
number of jobs, nationwide, in industry (i) at the beginning of the analysis period (t-1)
= number of jobs, nationwide, in industry (i) at the end of the analysis period (t)
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Limitations
 The shift-share technique is only a descriptive tool. It should be used in combination with
other analyses to determine a region's economic potential. Shift-share does not account
for many factors including the impact of business cycles, identification of actual
comparative advantages, and differences caused by levels of industrial detail.
 The shift-share analysis cannot explain the causes of each component. Moreover, this
shift-share analysis examines employment changes, not changes in income, earnings, or
value-added, which are alternative measures of an industry's size and strength. While the
shift-share technique can be applied to these additional measures, they are not included
here.
 A shift-share industrial analysis is a "snap-shot" of 2 particular time frames and may not
give an entirely clear picture of the local and national economies because the results are
sensitive to the period of time chosen.
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Article Review
Title: Employment Growth in Ceara (Brazil): a Shift-Share Analysis (2000-2005)
Between 2000 and 2005, formal employment grew by 33.15% in Ceara (Brazil). Hence, the main
objective of this paper was to analyze which municipalities and sectors contributed the most to
such growth through a shift-share analysis of employment. The results indicate a considerable
dispersion among municipalities in terms of job creation according to the composition of their
productive structures and specific factors that yield them (or not) differential competitive
advantages.
Objectives:
1. To analyze which municipalities and sectors contributed the most to such growth through
a shift-share analysis of employment.
2. To analyze which factors affect the process of job creation at the municipal level
Methodology

Data Collection- Formal Employment of “Ceara” State (184 Municipality)

Analysis of a Specific Municipality

Analysis of a Specific Sector

Regression Analysis to Identify Location Factor
Analytical Method and Findings
In this paper, shift share method is used to examine the performance of employment growth
indicators in the municipalities of Ceara, and the productive sectors of each municipality. A
single specific economic sector within a municipality, then the net component will be given by
the difference between the actual change in employment in that sector within the municipality
and the change in employment had it grown at the same rate as the state during the period in
consideration; in this analysis 5 years.
Then the specific municipality is analyzed, for all sectors. In terms of interpretation of the
components of shift share, there are some important differences. For instance, the net component
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now indicates if a municipality was able or not to increase the number of jobs in all sectors faster
than the State’s general average.
The mix component reflects the change in employment within the municipality that can be
explained by the composition of the State’s productive structure. This component, whenever
positive, indicates that the municipality is specialized in high-employment-growth sectors.
Finally, the share component could be understood in this case as a result of structural and
locational advantages of the municipality, and such component helps to determine which sectors
will be more or less dynamic in terms of employment creation therein.
And from the analysis, a wide range of results is identified. It is found that 20 out of the 184
municipalities of the State presented negative growth in employment during this period, whereas
nothing less than 119 of them presented a positive net component. Approximately 64.6% of
Ceara’s municipalities presented a positive net component and none of them had a negative share
component. This suggests that endogenous and locational advantages that a municipality has are
indeed very important to yield high formal employment growth rates. This argument is
strengthened by the fact that the majority of the municipalities that presented a negative net
component also had a negative share component (32.6% of the total).
References
Lopes, Cláudio André Gondim Nogueira and Daniel A. Feitosa. (n.d.). EMPLOYMENT GROWTH IN
CEARA: A SHIFT-SHARE ANALYSIS (2000-2005). Retrieved 4 20, 2011, from IPECE:
www2.ipece.ce.gov.br/encontro/artigos_2008/16.pdf
Geoffrey .J.D. Hewings, M. A. (2008, 9). INCORPORATING SECTORAL STRUCTURE . Retrieved 4 19,
2011, from REAL,The University of Illinois at Urbana-Champaign : www.real.uiuc.edu/.
SHIFT SHARE ANALYSIS NARRATIVE . (2002, 1 25). Retrieved 4 18, 2011, from
socrates.cdr.state.tx.us/iSocrates/files/ShiftShareNarrative.pdf
Quintero, James Paul, " Regional Economic Development: An Economic Base Study and Shift-Share
Analysis of Hays County, Texas" (2007). Applied Research Projects, Texas State University-San Marcos.
Paper 259. http://ecommons.txstate.edu/arp/259
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