Toward a more comprehensive shift-share analysis: An illustration using regional data

Abstract

Shift-share analysis has been extensively used to investigate the different drivers of changes in socioeconomic variables in both spatial and non-spatial contexts. This paper presents a comprehensive shift-share formulation that, by considering all the possible interactions between the geographical and sectoral variables that interplay in a non-spatial context, accounts for the intrinsic conditions of the regions that could affect the regional changes when spatial influences are not detected. The proposed technique is illustrated by analyzing the growth of industrial gross value added in the Spanish provinces between 2015 and 2019. Our results show the relevance of the intrinsic effects: the advantages (disadvantages) of the industrial sector within each province and the regional dynamism are important factors to explain the industrial changes in the Spanish regions. These findings provide evidence for the use of the comprehensive shift-share as a tool that contribute to the regional analysis by identifying the characteristics of vulnerable regions that require further attention to avoid or lessen the effects of low economic growth.