The location quotient (LQ) is a measure of the "Relative size" means in terms of employment.relative size of an industry in a region compared to the average size in the nation. An LQ of 1.0 indicates an industry is the same size in the region as is average in the nation; an LQ of 2.0 means the industry is twice as large in the region compared to average; and an LQ of 1/2 indicates the industry is half as large regionally as average in the nation.
The location quotient for an industry identifies the degree to which the industry specializes in or is concentrated in a region. With an LQ of 1.25 or higher, a region is considered to possess a competitive advantage in that industry. Firms in a specific industry often aggregate because of some competitive advantage found in an area such as geographic location, natural resources, and human resources. (A region can have a competitive advantage in a growing or declining industry.)
By formula, the location quotient is the ratio of an industry’s share of total employment within the region to the same industry’s share of employment in the nation.
The location quotient for an occupation is calculated similarly to that for an industry.
Note: The location quotient of regional industries and occupations can be found in the Clusters analytic. The Industry Snapshot analytic lists industry LQs by NAICS code.
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