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

Author

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  • Tariq Mahmood

    (Pakistan Institute of Development Economics, Islamabad.)

Abstract

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.

Suggested Citation

  • Tariq Mahmood, 2015. "Mediating Effect of Advertising Expenditure on Labour Productivity - A Case of Manufacturing Industries in Pakistan," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 54(1), pages 1-15.
  • Handle: RePEc:pid:journl:v:54:y:2015:i:1:p:1-15
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    References listed on IDEAS

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    1. repec:use:tkiwps:2929 is not listed on IDEAS
    2. 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.
    3. 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.
    4. 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.
    5. 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.
    6. 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.
    7. 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.
    8. 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.
    9. 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.
    10. 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.
    11. 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.
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    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Productivity; Mediation; Advertising; Industries;

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • C31 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models; Quantile Regressions; Social Interaction Models
    • M37 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Marketing and Advertising - - - Advertising
    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General

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