Shift-share analysis revisited: the allocation effect and the stability of regional structure

This paper examines the Esteban-Marquillas reformulation of the ''classical'' shift-share equation. The revised equation is used to decompose sectoral employment growth between 1960 and 1970 into four effects that measure differential change among U.S. regions. The empirical results indicate that this new technique expands the analytic properties of shift-share analysis, but that interpretations are sensitive to the temporal representation of regional structure in the shift-share equation.