Productivity Change in Manufacturing Regions: A Multifactor/Shift-Share Approach

ABSTRACT The traditional shift-share model measures the combined effects of output growth and productivity change on employment. A region with above average employment growth either has a favorable industry mix or enjoys a competitive advantage over other regions. To separate the effects of output and productivity, the shift-share model is extended to decompose the effects of changes in output and productivity on employment. This paper modifies the Rigby-Anderson extension by separating the contribution of labor and capital to productivity growth in the analysis of regional economic performance, and investigates twenty (two-digit SIC) manufacturing sectors in twelve states (six snowbelt, six sunbelt states) to assess whether observed changes in employment were due to changes in output or to productivity.     

Spatial Industrial Dynamics in Sweden: Urban Growth Industries

In this paper two basic theories within spatial industrial dynamics—the filtering-down theory and the spatial product cycle theory—are used to explain processes of spatial decentralization and centralization of economic activities. In particular, a case is made for the idea that employment decentralization should be expected not only for growing and maturing manufacturing industries but also for growing and maturing service industries. Based upon this theoretical framework the empirical part of the paper analysis the spatial behavior during the period 1980 to 1993 of the employment in a group of 19 industries in Sweden—the so-called urban growth industries—with an expected high potential for employment decentralization. Most of the industries exhibited the expected pattern of employment decentralization with the larger medium-sized regions as the main winners. A shift-share analysis shows that the overall magnitudes of the competitive shift components are rather small and that, hence, Sweden during the period 1980–1993 did not experience a drastic change in the spatial distribution of its urban growth industries.     

Shift-Share Analysis and the Potential for Predicting Regional Growth Patterns: Some Evidence for the Region of Quebec,Canada

The purpose of this paper is to explain changes in regional attractiveness as measured by the competitive component of the shift-share model. This is done by applying the shift-share model to the manufacturing sector in the province of Quebec and using time series data for twenty two-digit industries as the basis of analysis. The study concludes that shift-share is useful for analyzing historical employment patterns and identifying their causes through regression analysis. However, the inherent structural instability limits the predictive potential of the model.     

On the Value of Homotheticity in the Shift-Share Framework

The purpose of this paper is to examine the usefulness of homothetic reformulations of the shift-share accounting model to the practitioner of regional growth studies. The reformulations of Esteban-Marquillas (1972) and Arcelus (1984) are examined to determine if they improve the shift-share framework as a means for accounting for regional economic growth or decline. The purpose of the homothetic models is to separate out change in a region's employment (or value added) associated with its prior or base year specialization in particular industries from change associated with changes in the mix of industries that occurred during the period under study. It is contended while the resulting accounts may help in understanding individual industry's growth rates, they shed little light on total regional growth. Indiana employment data from 1977 and 1986 are used to illustrate the arguments.     

Shift-Share Analysis: The International Dimension

This paper extends the traditional shift-share model to incorporate international effects. While some industries compete nationally for markets, other compete internationally. For industries competing nationally, regional growth derives from regional superiority relative to the national economy. For those competing internationally, regional growth is tied to regional advantages from specialization and competitive advantage relative to the international economy. Building on the Esteban - Marquillas concept of homothetic employment, the international shift-share model identifies regional growth due to regional and national competitive advantage and regional and national specialization. We demonstrate that the international model retains the property of region to region additivity.     

Shift‐Share Analysis and Changes in Japanese Manufacturing Employment

Shift‐share analysis is used to examine the role of spatial structure on changes in regional manufacturing employment, in contrast to the traditional focus of shift‐share studies on the role of industrial structure. It is argued that changes in a region's space‐economy can be understood not only in terms of the economic subdivisions of the region but also in terms of the contribution of its spatial subdivisions. The latter is illustrated by means of a case study of the contribution of different types of local area to changes in regional manufacturing employment in Japan. Each region was subdivided into four types of local area based on population density. The analysis covered the period from 1981 to 1995, a time of major transformation in Japan's space‐economy. The shift‐share model was also used to estimate the impact of local area output and productivity on changes in regional employment. In general, the results show that there was a progressive underdevelopment of the core regions, associated with falling output and productivity. The country's peripheral regions were characterized by development, associated with rising output and productivity. Atthe local scale, however, the picture is far more complex. Types of local area contributed to regional employment change in very different ways, with respect to both time, region, and output/productivity. The contribution of local spatial structure to the regional space‐economy of Japan is fundamentally fragmented and uneven.     

Developments in the Location of Selected Computer-Related Industries in the united states

This study focuses upon changes in three computer-related industries between 1974 and 1985. An attempt is made by means of entropy indices and shift-share analysis to determine if diffusion in those industries conforms to the product-cycle model. We employ primarily state-level data derived from County Business Patterns and supplemented by US. Censuses of Manufacturing and Services. Our findings indicate that all the industries displayed substantial increases in employment and considerable dispersion, although by no means were the changes uniform. The hypothesis that the dispersion is following the product-cycle model, that is, from core areas to peripheral regions, receives little support from this study. The model, however, should not be rejected out of hand, because all three industries studied have a duality in the size of firms that the data masks. This duality may affect the applicability of any model. Further attempts to explain the spatial distribution of any of these industries should begin with disintegrated data. Unfortunately such data are not presently easily attainable.     

Dynamic Shift-Share Analysis

Most applications of shift-share analysis to regional employment change have used a study period of several years and have examined conditions only at the beginning and end years. This comparative static approach does not take into account the continuous changes in both industrial mix and size of total employment of the region over the study period. Calculating the national growth effect, the industrial mix effect, and the competitive effect on an annual basis and then summing the results over the study period provides a more accurate allocation of job changes among the three shift-share effects. This approach, which we term dynamic shift-share analysis, also allows unusual years and years of economic transition to he identified. We illustrate the use of dynamic shift-share by presenting results of an analysis of New England employment growth from 1939 to 1984, using U.S. Bureau of Labor Statistics data. The use of the dynamic form of shift-share is important when the study period is characterized by either large changes in regional industrial mix or major differences between regional and national growth rates.     

NAFTA and Industrial Adjustment: A Specific-Factors Model of Production

The North American Free Trade Agreement (NAFTA) will continue to attract political debate as U.S. manufacturing industries adjust in the face of increased import competition and export opportunities. This study applies the specific factors model of production to manufacturing industries in Alabama to examine the pending adjustment. As industrial prices change, there will be small output adjustments in the short run and downward pressure on the wages of production workers. Projected changes in industrial investment will lead to substantial long-run output adjustments.     

Weighted spatial dynamic shift-share model as a forecasting tool for a regional economy: The case of South Korea

This study proposes a weighted spatial dynamic shift-share model that considers two regional attributes, namely, interregional interactions and regional receptive capabilities for domestic and international economic change, to improve the forecasting capability of the traditional shift-share model. In particular, the spatial dependence among regions is embodied by a spatial weight matrix based on contiguity. Additionally, regional receptive capabilities are represented by weights imposed on regional industries. Forecasts over the period of 2014–2016 are made for 14 regions in South Korea using the proposed model. The results are compared with actual data from the same period and evaluated in terms of the mean absolute percentage error. The results indicate that the proposed model is more reliable and accurate than the traditional model and other dynamic extensions.     

Economic Stability and Economic Growth in Rural Communities: Dimensions Relevant to Local Employment Creation Strategy

Approaches for analyzing employment stability with aggregated data for SICs in large regions or major metropolitan areas are misleading indicators of the impact of manufacturing growth in rural areas. Performance of moderate-sized individual establishments seriously impact total employment variation in small-employment-sized rural communities, requiring analysis of the determinants of employment stability of these establishments. Aggregate SIC performance and most conventional criteria for judging probable stability appear to provide very limited predictability for individual firm performance. However, manufacturing development appears generally to have desirable effects on community-wide employment stability.     

Globalization and Regional Change in the U.S. Furniture Industry

ABSTRACT Furniture manufacturing has experienced rapid globalization in recent years. This is mainly the result of global production networks established by large manufacturers and retailers seeking to reduce costs in a highly competitive environment. The industry's globalization has been facilitated by technological innovations and the global reduction of trade and investment barriers. In the U.S., furniture‐producing regions are experiencing tumultuous change. Growing numbers of firms are outsourcing production to China, which is now responsible for about half of all U.S. furniture imports. Employment levels have plummeted. However, an analysis of spatial patterns of employment, output, and capital investment in U.S. furniture manufacturing shows that regional change is not uniform. Southern regions characterized by larger firms specializing in wooden case goods production have been especially vulnerable to job loss.     

Regional Growth Dynamics in the Service Sector: The Determinants of Employment Change in UK Regions, 1971–2005

There is a need to better understand the dynamics relating to the evolving economic structure of regions, in particular factors concerning deindustrialisation and the growth of services. In order to unpick the dynamics relating to contemporary regional evolution, this paper examines regional employment in the UK's services sectors from 1971 to 2005. The analysis utilises the statistical technique of multi‐factor partitioning to examine the evolutionary dynamics of employment change in the UK service sector. Overall, differing growth trajectories in services employment across regions appear to be the result of the different underlying industrial structures observed within the regions themselves. The findings indicate that the industrial structure of a region has a significant influence on employment change in services, with related variety being of greater consequence than specialisation. This suggests that diversity, or urbanisation, effects have a greater influence than specialisation effects on “lighter” industries than “heavier” industries. Spatio‐temporal variations within the development of services are evident in the analysis, and there is evidence of convergence across the regions for all sub‐sectors examined. It concludes that in an increasingly services‐dominated economy, diversity and related variety have some weight in explaining regional development paths.     

Manufacturing Output Indexes for a Metropolitan Area: A Look at New Economic Indicators

The purpose of this paper is to construct monthly manufacturing output indexes for a metropolitan area, employing a method used by the Federal Reserve Banks to construct regional manufacturing indexes. The Tulsa metropolitan area is the region considered. The index of total manufacturing output is included in a vector autoregression model of the Tulsa economy. The results indicate that the linkages between manufacturing activity and non-manufacturing employment differ from the linkages between employment in those sectors, and that since the early 1980s both sectors have become less sensitive to changes in the price of oil.     

Growth and Location of Economic Activity: The Spatial Dynamics of Industries in Canada 1971–2001

ABSTRACT A growing literature has accumulated that points to the stability of industrial location patterns. Can this be reconciled with spatial dynamics? This article starts with the premise that demonstrable regularities exist in the manner in which individual industries locate (and relocate) over space. For Canada, spatial distributions of employment are examined for seventy‐one industries over a thirty‐year period (1971–2001). Industry data is organized by “synthetic regions” based on urban size and distance criteria. “Typical” location patterns are identified for industry groupings. Industrial spatial concentrations are then compared over time using correlation analysis, showing a high degree of stability. Stable industrial location patterns are not, the article finds, incompatible with differential regional growth. Five spatial processes are identified, driving change. The chief driving force is the propensity of dynamic industries to start up in large metro areas, setting off a process of diffusion (for services) and crowding out (for manufacturing), offset by the centralizing impact of greater consumer mobility and falling transport costs. These changes do not, however, significantly alter the relative spatial distribution of most industries over time.     

An analysis of employment patterns of domestic migrants and immigrants in a Rustbelt city: A study of Buffalo-Niagara Falls

This study evaluates employment patterns of domestic migrants and immigrants and also explores the role of ethnic niching for Asian and African American recent arrivals in the context of local structural transformation (e.g., the shift from manufacturing to services). Employment patterns are examined for industry-occupation groups using the 5% Public Use Micro Sample of the 2000 U.S. Decennial Census and the 2006–2010 of the American Community Survey. The study area is a Rustbelt city that has suffered from population loss: the Buffalo-Niagara Falls MSA. Location quotients and shift-share analysis are used to classify employment shifts into four industry-occupation groups: growing, transforming, declining, and emerging. Logistic regressions are estimated to identify the role of various demographic factors and ethnic niches on the employment of recent arrivals in the above four industry-occupation groups. The results show that the employment of recent arrivals vary by migration status and ethnicity. The role of ethnic niches is especially important in declining industry-occupation groups. The analytical framework can be used to understand where and how migrants, both domestic and immigrants, find work. Future studies can focus on the pros and cons of ethnic niching (e.g., barriers to suitable jobs, ethnic entrepreneurship through niche experience) as structural transformation continues across U.S. regions, especially with new technologies.     

Exploring the recent upsurge in productivity disparities among European regions

This paper analyses thse evolution of productivity disparities across 156 European regions in the period 2000–2015. Using regional data, a battery of inequality indexes enables us to assess the extent of regional disparities. After confirming that labour productivity is the main component of income disparities, a dynamic shift-share analysis is carried out at a 10-industry level of disaggregation. The study evaluates the relative role of the three components underlying the disparities in regional productivity: changes in the industry mix, and within- and between-industry productivity gaps. The main results can be summarised as follows. First, regional disparities are on the rise again in the EU. Second, most regions are now closer to the average, while a small group of the richest regions are moving further away. Third, the main drivers of productivity disparities are within-industry differences in labour productivity with regard to the richest regions and, less importantly, the specialisation of the richest regions in more progressive industries. Finally, the net effect of structural change is still making a positive contribution to convergence with the leading regions.     

State Unemployment Differentials: Equilibrium Factors vs. Differential Employment Growth

: Differentials in U.S. state unemployment rates were persistent in the early 1990s. In addition, states with higher employment growth did not necessarily have the lowest unemployment rates. Thus, this paper examines the differentials in U.S. state unemployment rates from 1992 to 1994, decomposing them into the parts that were due to differences in recent employment growth, and those that were due to longer-term equilibrium factors. Also, using the shift-share model, employment growth differences are decomposed into an industry mix component and a competitiveness component. The decomposition of the 1992 to 1994 unemployment rate differentials is based on an econometric equation estimated using panel data from 1972 to 1991. Explanatory equilibrium factors included in the model are amenities, demographic characteristics, education, industry composition, labor mobility, and wage rates.     

An Application of the Stock Adjustment Model in Estimating Employment Multipliers for the South Central Louisiana Petroleum Economy 1964–84

The South Central Louisiana Petroleum Economy received an economic rent from its petroleum resources during the energy crisis of the 1970s and early 80s. A differential export-base model incorporating a geometric lag was developed for estimating dynamic employment multipliers. This technique is especially applicable to regional economies in which exports are a major economic factor. Employment multipliers were estimated using ordinary least squares (OLS) regression. Results from the analysis indicate that agriculture, oil and gas mining, and manufacturing are highly significant employment generators. Both long-run and short-run employment multipliers were derived from the model. It is estimated that a five-dollar change in the real price of crude oil will result in a long-run employment change of 8,027 for the oil and gas mining industry. Based on estimates of the long-run multiplier, this will result in a total employment change of 28,014 for this economy.     

Ever-transient FDI and ever-polarizing regional development: Revisiting conventional theories of regional development in the context of China,Southeast and South Asia

In this new age of globalization, regions attempt to attract foreign direct investment (FDI) in order to achieve regionally balanced development. We revisit existing theories of regional development and FDI by analyzing recent data sets on FDI, employment, and trade in China, Southeast Asia, and South Asia. Using Chinese provincial data in 2004, 2008, and 2013 and applying panel estimations, our econometric results demonstrate that FDI remarkably influenced the concentration of employment in manufacturing, financial, and business services industries within the three Chinese macro-regions. We also find that FDI is ever transient, always moving away from high-cost to low-cost production bases across different regions. This transient nature of FDI is spatially selective and biased, and not able to generate the trickle-down effects to other neighboring regions. That is why FDI recently moved from China to Southeast and South Asia rather than from its coastal to inland regions. Furthermore, we show that this nature of FDI generally leads to polarization development for regions. As a synthesis or extension of the existing theories, we propose a leapfrog polarization pattern and strategy for vast developing countries in considering their regional development strategies.