Employment Change in LDs of West Virginia : A Dynamic Spatial Shift-Share Analysis

This paper uses dynamic spatial shift-share analysis to examine employment change in local development districts (LDs) of West Virginia for the period of 1976 to 2007. This paper differs from the standard shift-share analysis by combining the dynamic shift-share with the spatial shift-share and decomposing the employment change of selected sectors into four effects: state growth effect, industry mix effect, neighborhood competitive effect, and state competitive effect. Distance between main cities of local development districts were considered in developing the distance based weight matrix for measuring neighborhood competitive effects. Results describe the changing pattern of employment of the ten selected sectors namely farm employment, mining, construction, manufacturing, wholesale and retail trade, transportation and public utilities, finance insurance and real estate, services, government, and agricultural services of the eleven local development districts of West Virginia. In many LDs' service, finance, insurance and real estate, construction, and government sectors have been the leading contributors of employment growth in 32 year period. Even though, mining and manufacturing are two main sectors in the economy of West Virginia, employment growth of mining is reported only in a few LDs. Manufacturing employment is declining in all LDs. All LDs have some sectors that are adding employees. Investing them might accelerate economic growth. Neighborhood competitive effects show potential spatial impacts on several sectors