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Alpha Beta Analysis

The interactive tool below showcases our employment covariance analysis. For each MSA, we estimate a statistical equation that summarizes how a 100-bp change in national employment affects local employment. The equation consists of a constant (“alpha”) for each market and a “beta,” which is a multiplier applied to the national percent change in employment. The alpha indicates MSA growth that is independent of national growth. If there is no national job growth, then the alpha is the expected annual change in MSA employment. The beta for the U.S. is defined as 1.0. An MSA with a beta of 1.0 registers (on average) an increase of 100 bps in employment growth (plus its alpha) when national employment rises by 100 bps. A beta that is less than 1.0 indicates that the MSA does not boom (or bust) to as great an extent as the national economy, while a beta of greater than 1.0 indicates that such an MSA experiences swings of greater magnitude (around its trend) than percentage changes at the national level.

The scatter plot shows where each MSA’s alpha and beta falls relative to other markets. By default, the plot shows the top 50 MSAs (ranked by employment) with the data starting in 1991. Results can be filtered by choosing the starting date, a pre- or post-COVID ending date, the range of rankings, the range of alphas and betas, and specific MSAs. Multiple MSAs can be chosen by holding down the CTRL key. Filter selections can be cleared by clicking the eraser icon (     )  to the right of each filter.

 

Page 2 provides a table of the alpha and beta statistics for all MSAs, which can be sorted by clicking the column headers. Note that the data is not available for download through this interface. If you have any questions about these tools or the data, contact Rosemary Sylvan.

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