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These notes discuss and illustrate two new extensions of shift-share analysis: the productivity and output model and the international trade model. We also review a general limitation of these and other shift-share-type models with respect to the interaction between reference area and the region. A possible solution to this limitation is presented. The new extensions provide better insights about the regional economy but that benefit occurs at a cost. The cost is careful consideration and compensation where relatively large regions or sectors are central to the shift-share assessment. The extensions are important in addressing earlier problems with the shift-share approach. Our solution to shift-share limitation on reference area interaction is vital if the method is to be extended to these multiple environments.

A study investigating the foundations of economic performance and employment change in manufacturing in twelve states was conducted. Findings indicated that employment changes in the twelve states during the period of the study was caused by output growth, new investments in physical capital, and advances in technology. Labor productivity was also an important factor in employment change. The findings supported the snowbelt-sunbelt shift thesis.