American Institute of Certified Planners (AICP) Practice Exam

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What does the term "shift-share" primarily analyze?

Labor market fluctuations
Sector connections
Job changes in relation to local economy factors
Financial trends in urban areas

The correct answer is: Job changes in relation to local economy factors

The term "shift-share" primarily analyzes job changes in relation to local economy factors. This analytical tool helps economists and planners understand the reasons behind changes in employment levels across different regions. Shift-share analysis essentially breaks down employment changes into three components: national growth, industry mix, and local effect. The national growth component looks at how overall national economic trends influence local job markets. The industry mix examines how particular industries perform relative to a national average, while the local effect isolates the unique local dynamics that contribute to job growth or decline beyond national trends. This method is particularly useful in identifying whether a region is gaining jobs due to broader economic growth, specific industries thriving, or if local factors are driving unique employment trends. By focusing on job changes in relation to local economy factors, shift-share analysis provides insights that can inform economic development strategies, workforce planning, and policy-making.