Shift-share Analysis of Boston’s Creative Economy

1. Shift-share Analysis of Boston’s Creative Economy • Key Findings: • High Differential Shift in many industries show the strength of Boston’s Creative Economy; • Ten out of fifteen largest creative industries are identified as industries in which Boston has a competitive advantage; • The fast growing largest creative industries with high differential shifts are: Promoters of Entertainment Events without Facility, Cable Networks, Zoos and Botanical Gardens, Direct Mail Advertising, and Cable and Other Program Distribution. • Prepared by: • Yolanda Perez • Martina Kukin • Paul Leonard

2. Shift-share analysis is a useful technique to discern dynamic changes in the structure of a local economy in reference to a larger economy*… The shift-share was applied to Boston’s Creative Economy using the following parameters, formula and variables: • The sector under study – Boston’s creative economy • The reference economy – U.S. creative economy • Periods – years 1998 and 2002** EMPLOYMENT CHANGES IN BOSTON’S CREATIVE ECONOMY ECONOMIC GROWTH PROPORTIONAL SHIFT + DIFFERENTIAL SHIFT = + • Variables used: • A – 1998 Boston’s Creative Economy Employment • B – 2002 Boston’s Creative Economy Employment • C – Percent Change (Rate of Growth/Decline) in Boston’s Creative Economy • D – 1998 U.S. Creative Economy Employment • E – 2002 U.S. Creative Economy Employment • F – Percent Change (Rate of Growth/Decline) in the U.S. Creative Economy * e.g. Boston’s Creative Economy in reference to the U.S. Creative Economy. ** The years 1998 and 2002 were chosen due to data limitation – NAICS are available only since 1998 and are not fully comparable with the former SIC codes. The Census County Business Patterns latest year reported is 2002 at the time of this publication.

3. The economic growth (EG) factor refers to the share of employment growth/decline in the local economy, Boston’s Creative Economy, that could be explained by the changes in the larger economy, the U.S. Creative Economy… ECONOMIC GROWTH (EG) in the U.S. Creative Economy = 4.3% Growth = 4.3%

4. The proportional shift (PS) factor refers to the share of employment growth/decline in each individual creative industries in the local economy, that could be explained by the changes in each of these industries in the larger… • The following graph shows which creative industries are growing faster/shrinking slower or growing slower/shrinking faster than the overall U.S Creative Economy (4.3%); • The Proportional Shift is the difference between the overall creative economy growth/decline and creative industries growth/decline in the U.S. A positive change means that the individual creative economy industry is growing faster or shrinking slower than the overall creative economy. A negative change means that the individual creative industry is growing slower or shrinking faster than the overall creative economy; PROPORTIONAL SHIFT FOR THE FIFTEEN LARGEST CREATIVE INDUSTRIES* 100.00% 90.00% 80.00% 70.00% 60.00% 50.00% PROPORTIONAL SHIFT = 63%-4.3%=58.7% Employment Growth 40.00% + 30.00% 20.00% 10.00% 4.3% 0.00% U.S. CREATIVE ECONOMY GROWTH (1988-2002) -10.00% - Museums -20.00% Cable networks Book publishers Radio broadcasting Periodical publishers Advertising agencies Newspaper publishers Architectural services Television broadcasting Direct mail advertising Musical groups and artists Zoos and botanical gardens Book stores and news dealers Cable and other program distribution Promoters of entertainment events without facility U.S. Creative Industries * Industries with 500+ employees ranked by size

5. 425% 329% The differential shift (DS) factor refers to the share of employment growth/decline in each individual creative industries in the local economy, that could be explained by local competitive factors … • The Differential Shift is the difference between Boston’s and U.S. creative industries employment growth/decline; DIFFERENTIAL SHIFT FOR THE FIFTEEN LARGEST CREATIVE INDUSTRIES* DIFFERENTIAL SHIFT = 100.1%-27.4%=72.7% * Industries with 500+ employees ranked by size

6. Large Creative Industries P.S.* D.S.* Newspaper Publishers - + Architectural Services + + Book Publishers - + Television Broadcasting - - Promoters of Entertainment Events Without Facility + + Direct Mail Advertising - + Advertising Agencies - - Museums + - Book Stores and News Dealers + + Periodical Publishers - - Radio Broadcasting + - Zoos and Botanical Gardens + + Cable Networks + + Cable and Other Program Distribution + + • P.S. = PROPORTIONAL SHIFT: D.S. = DIFFERENTIAL SHIFT: • + Growing Faster + Competitive Advantage • - Growing Slower - Competitive Disadvantage The results of the shift-share analysis shows that Boston’s Creative Economy occupy a very competitive position in many creative industries… • If a creative industry has both a positive proportional shift and a positive differential shift, nationally the industry is not only growing faster or shrinking slower than the overall creative economy, but it also shows a competitive advantage locally compared to the same industry nationally. For example, Cable Networks have both a positive proportional shift at 86%, and a highly positive differential shift at 239%. • If a creative industry has a negative proportional shift but maintains a positive differential shift, the industry shows a competitive advantage locally compared to the same industry nationally. However, nationally the industry itself is growing slower or shrinking faster than the overall creative economy. A good example of this situation is Direct Mail Advertising whose proportional shift is negative at -13% whereas its differential shift is high and positive at 72%. • Conversely, if a creative industry has a positive proportional shift but a negative differential shift, nationally the industry is growing faster or shrinking slower than the overall creative economy. However, that same industry is less competitive locally, when compared to the nation. Radio Broadcasting, for example, has a positive proportional shift at 10% yet, a negative differential shift at -4%. • Finally, if a creative industry has both a negative proportional shift and a negative differential shift, the industry shows not only a competitive disadvantage locally compared to the same industry nationally, but also nationally the industry itself is growing slower or shrinking faster than the overall creative economy. This is true for Advertising Agencies. Their proportional shift is negative at –3% and their differential shift is also negative at –42%. Musical Groups and Artists + +

7. Bibliography: • Blakely, J. Edward, Bradshaw, K. Ted; Planning Local Economic Development: Theory and Practice. Third edition; London, Sage Publications, 2002; p. 127-131 • Shields, Martin; Using Employment Data to Better Understand Your Local Economy:Tool 4. Shift-Share Analysis Help Identify Local Growth Engines; The Pennsylvania State University, 2003 (http://www.cdtoolbox.org/economic_development/intro_5_2003.PDF) • Census County Business Patterns, 1998 and 2002 (NAICS Codes)