Regional Location Quotients

Industry location quotients are ratios that allow an area's distribution of employment by industry to be compared to a reference area's distribution. The U.S. is used as the reference area for all LQs within this application. The reference industry is always the all-industry, all-ownerships total for the local area, and for the nation. The value for location quotients are they can identify where comparative advantages may exist in a region.
If an LQ is equal to 1, then the industry has the same share of its area employment as it does in the nation. An LQ greater than 1 indicates an industry with a greater share of the local area employment than is the case nationwide. For example, the Permian Basin WDA will have an LQ greater than 1 in the Natural Resources and Mining industry because this industry makes up a larger share of the Permian Basin WDA employment total than it does for the nation as a whole.
LQs are calculated by first, dividing local industry employment by the all-industry, all-ownerships total of local employment. Second, national industry employment is divided by the all industry, all ownerships total for the nation. Finally, the local ratio is divided by the national ratio. Also note that since Quarterly Census of Employment and Wage data is not seasonally adjusted, a good rule of thumb is to keep quarters constant when comparing across different years.
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