by Jiayu Lai. Shift-share instruments are among the most widely used tools in applied economics, appearing in labor, trade, immigration, and policy evaluation research. But despite their popularity, many researchers still use them as black boxes — and risk invalid instruments as a result. In this blog post, I unpack how shift-share IVs actually work, why their validity depends on both the “shifts” and the “shares,” and what practical steps researchers should take to check assumptions. I also walk through how I used the Borusyak–Hull–Jaravel (2022, 2025) framework to reproduce the seminal Autor, Dorn, and Hanson (2013) China shock analysis.