International Trade, Productivity, and U.S. Regional Job Growth: A Shift-Share Interpretation

Abstract

To track the sensitivity of regional growth to international flows, shift-share components can be decomposed into import, export, and domestic market segments and a productivity component. By merging data on regional employment, national employment and output, and international trade, dynamic shift-share analysis is used to compare the experience of U.S. regions for the period from 1978 to 1986. Some regions, like New England and the Pacific, have relatively positive industrial mixes for both export and domestic market growth, while others, particularly the East North Central region, have negative ones. Dynamizing the model with annual data does not necessarily minimize the gap between national and regional growth rates, and results, especially for the competitive shift component, remain sensitive to subperiod designation. Regions have different stakes in national trade policy, and some would do better to target domestic rather than overseas markets.