A PRODUCTIVITY GROWTH INTERPRETATION OF THE LABOR DEMAND SHIFT-SHARE MODEL

This paper proposes modifications to the labour demand shift-share mod el set out in this journal by CASLER, 1989, to allow for its implement ation and to extend its use to analyses of regional labour productivit y growth. The paper begins by briefly outlining the theoretical basis for the shift-share method provided in Casler's paper, and then goes o n to present a specific reformulation of the model which incorporates input price and technological growth effects on labour demand. These a dditional effects are defined as productivity components within the sh ift-share model, and the empirical and theoretical implications of the modifications made are discussed in the paper. An empirical example o f the results obtained through the modified labour demand shift-share model is then provided for I;elected British regions. The paper conclu des by outlining potential uses of the modified model for regional ana lyses of labour productivity.