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Mediating Effect of Advertising Expenditure on Labour Productivity - A Case of Manufacturing Industries in Pakistan

Listed author(s):
  • Tariq Mahmood

    (Pakistan Institute of Development Economics, Islamabad.)

Registered author(s):

    This paper explores the possibility that the labour productivity enhancing effects often ascribed to capital intensity may partly act through some mediating variable. The paper uses a mediation model to estimate direct and indirect effects of capital intensity on labour productivity in Pakistan‘s manufacturing industries. The data involve 229 industries at five-digits level of aggregation. The data are taken from Census of Manufacturing Industries for the year 2005-06. Using capital intensity as an independent variable and advertising expenditure as a mediating variable, the paper estimates total, direct, and indirect effects on labour productivity. Approximately 18 percent of total effects on labour productivity are found to be mediated through advertising expenditure. The statistical significance of indirect effects is tested using standard normal tests as well as bootstrap method, and these effects are found to be significant.

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    File URL: http://www.pide.org.pk/pdf/PDR/2015/Volume1/1-15.pdf
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    Article provided by Pakistan Institute of Development Economics in its journal The Pakistan Development Review.

    Volume (Year): 54 (2015)
    Issue (Month): 1 ()
    Pages: 1-15

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    Handle: RePEc:pid:journl:v:54:y:2015:i:1:p:1-15
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    1. Kutan, Ali M. & Yigit, Taner M., 2009. "European integration, productivity growth and real convergence: Evidence from the new member states," Economic Systems, Elsevier, vol. 33(2), pages 127-137, June.
    2. repec:use:tkiwps:2929 is not listed on IDEAS
    3. Hamilton, James L, 1972. "The Demand for Cigarettes: Advertising, the Health Scare, and the Cigarette Advertising Ban," The Review of Economics and Statistics, MIT Press, vol. 54(4), pages 401-411, November.
    4. Richards, Timothy J. & Patterson, Paul M., 1998. "Dynamic Complementarity In Export Promotion: The Market Access Program In Fruits And Vegetables," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 23(02), December.
    5. Hussain, Karrar, 2009. "Causal Ordering Between Inflation and Productivity of Labor and Capital: An Empirical Approach for Pakistan," MPRA Paper 16486, University Library of Munich, Germany.
    6. Karrar Hussain, 2009. "Causal Ordering Between Inflation and Productivity of Labor and Capital: An Empirical Approach for Pakistan," CID Working Papers 39, Center for International Development at Harvard University.
    7. Margherita Velucchi & Alessandro Viviani, 2011. "Determinants of the Italian labor productivity: a quantile regression approach," Statistica, Department of Statistics, University of Bologna, vol. 71(2), pages 213-238.
    8. Stuart Fraser & David Paton, 2003. "Does advertising increase labour supply? Time series evidence from the UK," Applied Economics, Taylor & Francis Journals, vol. 35(11), pages 1357-1368.
    9. Nicholas Apergis & Claire Economidou & Ioannis Filippidis, 2008. "Innovation, Technology Transfer and Labor Productivity Linkages: Evidence from a Panel of Manufacturing Industries," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 144(3), pages 491-508, October.
    10. Zafar Mahmood & Rehana Siddiqui, 2000. "State of Technology and Productivity in Pakistan’s Manufacturing Industries: Some Strategic Directions to Build Technological Competence," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 39(1), pages 1-21.
    11. Ignatius Horstmann & Sridhar Moorthy, 2003. "Advertising Spending and Quality for Services: The Role of Capacity," Quantitative Marketing and Economics (QME), Springer, vol. 1(3), pages 337-365, September.
    12. Ehrlich, Isaac & Fisher, Lawrence, 1982. "The Derived Demand for Advertising: A Theoretical and Empirical Investigation," American Economic Review, American Economic Association, vol. 72(3), pages 366-388, June.
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