Shift-Share Method in Assessing the Interrelation of Employment Dynamics in Cities and Regions

Abstract

Purpose of the study. The aim of the study is to analyze the dynamics of employment in major cities of the Russian Federation, including megacities, in the context of rapid innovative development, complex demographic situation, and instability of external migration flows. The research focuses on identifying factors at various levels that affect employment, with an emphasis on the interconnections of cities and regions in the hierarchical “city-region” system. Materials and methods. The paper explores the shift-share method (SSM), which allows decomposing changes in employment with highlighting the influence of the overall dynamics of the regional labor market, industry characteristics, and competitive factors of cities. A multilevel analysis using this method aims to assess the structural-dynamic links of the hierarchically interconnected “city-region” system. The research uses municipal statistics data from 81 cities of the Russian Federation for the period from 2017 to 2021. Based on the concept of sectoral division of the economy, taking into account the functional features of the included industries, the structural-dynamic employment indexes in cities were analyzed across four economic sectors. Results. The application of the SSM method yielded results that allow for a detailed examination of employment dynamics in major cities. The analysis includes the influence of the overall dynamics of the regional labor market, industry characteristics, and competitive factors of cities. The research validates the effectiveness of the shift-share method for the preliminary analysis of employment dynamics in cities with the aim of specifying the significance of the impact on it by industrial and sectoral factors at regional and local levels and their prioritization for further analysis and the development of recommendations for urban economic management. Conclusion. The study highlights the importance of analyzing employment in the context of the urban economy, especially under conditions of rapid innovative development and demographic challenges. The SSM method appears to be an effective tool for preliminary examination of employment dynamics, identifying key factors, and developing management strategies aimed at improving the economic development of Russia’s major cities.