Shift-share analysis - Definition

Shift/share analysis is a technique sometimes used for forecasting land use, most often for forecasting changes in a set of urban areas or regions.

We have a study area in which employment and population are growing (or declining; the technique works the same way in either case and it saves words to make the growth assumption.) Total employment in our area is e , and that in the i^th activity is e_i . We have a larger frame reference area, usually the nation, where total employment is E , and that in the i^th activity is E_i . The shift-share model says that growth in the study area’s i^th activity employment is a function of:

• The study area’s share of national (or regional) growth.
• The mix change in activities.
• And the shift change of activities toward the study area.

This says that change in employment in the study area’s ith activity from time t to time t+n can be measured:

<math> e_i^{t + n} - e_i^t = share\;change + mix\;change + shift\;change <math>

or

<math> e_i^{t + n} - e_i^t = e_i^t \left[ {{{E_{}^{t + n} } \over {E_{}^t }} - 1} \right] + e_i^t \left[ {{{E_i^{t + n} } \over {E_i^t }} - {{E^{t + n} } \over {E^t }}} \right] + e_i^t \left[ {{{e_i^{t + n} } \over {e_i^t }} - {{E_i^{t + n} } \over {E_i^t }}} \right] <math>

As this brief discussion suggests, shift-share analysis may be viewed as adding explicit considerations to economic base analysis. Economic base analysis asks how an area shares in national growth. Shift-share goes on to look at the changing mix of activities and at whether activities are shifting toward or away from the study area.