Regional Analysis Methods

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Regional Analysis Methods

• Benchmarking, Location Quotients, Shift-share

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Agenda

• Review
• Shift-Share
• What is it?
• How do you do it?
• What does it mean?
• Tools for interpreting
• Cautions and limits
• Multipliers
• Policy Map?

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First Assignment Q1

• What was the population of Allegheny County in
  2000 and 2004 (Census or BEA)? 
• 2000 1,279,817 (BEA - REIS or Census July
  1est.)
• or 2000 1,281,666 (Census 2000 (SF1) - April
  1 estimate)
• 2004 1,247,512 (BEA-REIS)

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First Assignment Q2-4

• How many total jobs were available in Allegheny
  County in 2004?
• 861,868 (BEA total employment)
• How many Allegheny County residents were employed
  in 2004?
• 604,203 (BLS, CPS/LAUS)
• What was the total "covered" employment in 2004?
• 685,878 (BLS, QCEW)

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Second Assignment - I

• When you are benchmarking one region against
  another, there are many factors to consider in
  the selection of an appropriate benchmark.  Name
  two (2)
• If you are studying a region with dynamic annual
  changes, what is the best method to calculate the
  growth rates?
• You should never use a location quotient for what
  purpose?

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 Second Assignment Part 2

• There a several considerations for interpreting a
  location quotient.  Name two (2) 
•  What is the difference between a firm and an
  establishment?

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How do we interpret Pghs Growth?
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We can look at a basic view
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Or a little more complexity
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Basic benchmarking can be helpful
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Basic benchmarking can be helpful
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• But these descriptions still havent explained
  much

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Location Quotients

• Formula

Interpretation
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Shift-Share

• What are the 3 components of a shift-share
  analysis?
• A competitive industry is defined as WHAT?
• Explain
• National share
• Industry Mix
• Regional Shift
• What are the limits of shift-share?

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Albuquerque, 1970-1990

• 127 total employment growth
• 190,000 Jobs
• What explains this growth?

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Three factors

• Growth of the national economy
• Presence of growth industries (or declining ones)
• Local competitive factors

Diff btw US actual ch.
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Brief Glossary

• R actual regional change
• N change due to national growth
• M Industry mix effect
• S regional shift effect

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Growth of the U.S. Economy

• If Alb had grown at the U.S. rate, it would have
  added 83,770 jobs.
• The growth of the U.S. economy accounted for
  83,770, or 44 of the actual change.
• Alb in fact added more than 191,000 jobs so
  something else must explain the regions growth

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The mix of industries in the region

• The presence of growth industries were not a
  major factor in the regions performance. Growth
  industries on the whole accounted for 8 of the
  actual change, which equaled 14,595 jobs.
• Must add jobs faster than the nation as a whole
  to have a positive Mix effect

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Local competitive factors

• The shift-share analysis estimates that 49 of
  the growth in employment is the result of local
  competitive conditions.
• 93, 263 of the jobs created in Albuquerque were
  due to these local advantages
• These advantages were spread across every
  industry but one Mining.

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Albuquerque Industry Data
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What are the key industries?

• We can combine statistics on economic growth, the
  shift-share, and specialization (LQs) to
  highlight leading and lagging industries.

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Finding Key Industries

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State and Local Gov

• It is a large industry in the region with
  considerable growth.
• It is not a growth industry nationally but this
  industry does not move on strictly national
  dynamics.
• It is a desirable goal to growth this industry?

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Manufacturing

• Still somewhat small only 7 of regional
  employment, less then 27,000 employees.
• Potential emerging sector in the region, but the
  sector is declining nationally
• Can Alb capture more of this industry and for how
  long?
• Are there subsectors in which the region has a
  concentration and an advantage that are growing?

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Services

• Employment in Services accounts for 25 of the
  regions employment (comparable to the US share).
  
• The industry grew by 70,000 jobs in the region
  (190), well above national and industry growth
• Local factors were positive, but contributed less
  to the growth than national and industry factors.

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Shift-share benchmarking
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You may need to normalize the data
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The level of industry detail impacts the
shift-share analysis

• More detail increases the accuracy of the
  industry mix effect and the local shift.

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The time frame impacts the shift-share

• If the industry structure changes dramatically
  then a longer time frame distorts the industry
  mix effect.

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Strategies for missing data

• Ignore it
• Find an alternative source
• Estimate missing midpoint data with an average or
  linear projection
• Use the proportion of the industry from a higher
  level of geography
• Project the missing data based on regional growth
• Project the missing data based on national
  industry growth

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Comparing the 3 "Solutions" to missing data
1 estimate nondisclosed data 2 ignore
nondisclosed data or assume 0 3 exclude
missing sectors entirely
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Multipliers

• What is a multiplier?
• Based on industry input-output
• How do you use them correctly
• Change in final demand
• Substitution
• Total vs. direct vs. indirect jobs
• Sources
• RIMS II
• IMPLAN
• REMI