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November 1996, Vol. 119,
No. 11
A decade of economic change and population shifts in U.S. regions
William G. Deming
Between 1983 and 1990, the United States experienced one of its longest periods of economic expansion since the Second World War. After a brief recession during 1990–91, the economy resumed its expansion, and has continued to improve. The entire 1983–95 period also has been a time of fundamental economic change in the Nation. Factory jobs have declined in number, while service-based employment has continued to increase. As we move from an industrial to a service economy, States and regions are affected in different ways.
While commonalties exist among the States, the economic events that affect Mississippi, for example, are often very different from the factors which influence California. This article examines the economic fortunes of the individual States between 1983 and 1995. The first part of the article examines employment growth within the States, using a shift-share analysis. Next, because State employment growth often goes hand-in-hand with population growth, these two variables are examined in combination. Finally, several key issues related to regional economic growth over the last decade are discussed.
Shift-share analysis
One technique that often is used to measure employment changes at
the State or regional level is shift-share analysis. As applied
in this article, shift-share analysis decomposes State employment
growth into three components: national share, industry mix, and
State employment share. The national share component shows the
proportion of total employment change that is due simply to
overall employment growth in the U.S. economy. That is, it
answers the question: "What would employment growth in State
‘X’ have been if it had grown at the same rate as the
Nation as a whole?" The industry mix component indicates the
amount of employment change attributable to a State’s unique
mix of industries. For example, a State with a relatively high
proportion of employment in a fast-growing industry, such as
services, would be expected to have faster employment growth than
a State with a relatively high proportion of employment in a
slow-growing or declining industry such as manufacturing. The
third effect, State employment share, shows whether the
industries within a State performed better or worse than the same
industries on a nationwide basis.1
This excerpt is from an article published in the November 1996 issue of the Monthly Labor Review. The full text of the article is available in Adobe Acrobat's Portable Document Format (PDF). See How to view a PDF file for more information.
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