American Institute of Certified Planners (AICP) Practice Exam

What method adds a shift factor to account for jobs moving in or out of a local economy?

1. Location Quotient

2. Input-Output Modeling

3. Shift-share

4. Employment Analysis

The correct answer is: Shift-share

The shift-share method is a valuable analytical tool used to decompose the growth or decline of a local economy's employment into three distinct components: national growth rate, industry mix effect, and local share effect. It enables planners to assess how much of the change in local employment can be attributed to broader economic trends, the specific mix of industries in the local area, and the local economy’s individual performance. The shift factor specifically captures the impact of jobs that are moving in or out of a local area, providing insights into economic trends on a more granular level. By examining economic shifts, planners can identify whether local policies or conditions are attracting new jobs or if they are losing jobs to other regions, thus allowing for better-informed decisions about economic development strategies. Other methods, while useful in their own right, do not focus directly on the input-output aspects of local job movement in the same comprehensive manner. The location quotient measures the concentration of a particular industry in a local economy compared to a larger reference economy, while input-output modeling examines the interrelationships between different sectors of an economy. Employment analysis tends to focus on statistical trends and metrics without specifically addressing the factors of job movement in and out of a locale as effectively as shift-share analysis does.