A shift-share analysis, used in regional science, political economy, and urban studies, determines what portions of regional economic growth or decline can be attributed to national, economic industry, and regional factors. The analysis helps identify industries where a regional economy has competitive advantages over the larger economy. A shift-share analysis takes the change over time of an economic variable, such as employment, within industries of a regional economy, and divides that change into various components. A traditional shift-share analysis splits regional changes into just three components, but other models have evolved that expand the decomposition into additional components. Overview A shift-share analysis attempts to identify the sources of regional economic changes. The region can be a town, city, country, statistical area, state, or any other region of the country. The analysis examines changes in an economic variable, such as migration, a demographic statistic, firm growth, or firm formations, although employment is most commonly used. The shift-share analysis is performed on a set of economic industries, like those defined by the North American Industry Classification System (NAICS). The analysis separates the regional economic changes within each industry into different categories. Although there are different versions of a shift-share analysis, they all identify national, industry, and regional factors that influence the variable changes. Traditional model The traditional form of the shift-share analysis was developed by Daniel Creamer in the early 1940s, and was later formalized by Edgar S. Dunn in 1960. Also known as the comparative static model, it examines changes in the economic variable between two years. Changes are calculated for each industry in the analysis, both regionally and nationally. Each regional change is decomposed into three components. National growth effect is the portion of the change attributed to the total growth of the national economy. It equals the theoretical change in the regional variable had it increased by the same percentage as the national economy. Industry mix effect is the portion of the change attributed to the performance of the specific economic industry. It equals the theoretical change in the regional variable had it increased by the same percentage as the industry nationwide, minus the national growth effect. Local share effect is the portion of the change attributed to regional influences, and is the component of primary concern to regional analysts. It equals the actual change in the regional variable, minus the previous two effects. Formula The regional change in