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Does advertising increase labour supply? Time series evidence from the UK

  • Stuart Fraser
  • David Paton

Wages in industrialized countries have risen considerably during the last 50 years, whereas hours worked, for manual workers at least, have decreased only marginally. In Europe, one policy response has been to attempt to protect workers from pressure to work long hours by placing legal restrictions on the amount of hours that may be worked each week. This paper examines the possibility that, in fact, observed hours may be the result of a desire of workers to work longer due to a shift in their preferences from leisure to increased consumption, caused by the huge increase in mass media advertising. A cointegrating VAR framework is used to test this hypothesis on UK time series data for both males and females from 1952 to 1997. Advertising is shown to be positively associated with hours worked for both male and female series. Causality tests indicate unidirectional causality, for males and females, from advertising to hours worked. These results suggest that the European policy response is more likely to restrict employee rather than employer discretion over hours.

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Article provided by Taylor & Francis Journals in its journal Applied Economics.

Volume (Year): 35 (2003)
Issue (Month): 11 ()
Pages: 1357-1368

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Handle: RePEc:taf:applec:v:35:y:2003:i:11:p:1357-1368
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  1. Phillips, Peter C B, 1996. "Econometric Model Determination," Econometrica, Econometric Society, vol. 64(4), pages 763-812, July.
  2. Hiro Y. Toda & Peter C.B. Phillips, 1991. "Vector Autoregression and Causality," Cowles Foundation Discussion Papers 977, Cowles Foundation for Research in Economics, Yale University.
  3. Taylor, Lester D & Weiserbs, Daniel, 1972. "Advertising and the Aggregate Consumption Function," American Economic Review, American Economic Association, vol. 62(4), pages 642-55, September.
  4. David George, 1997. "Working Longer Hours: Pressure from the Boss or Pressure from the Marketers?," Review of Social Economy, Taylor & Francis Journals, vol. 55(1), pages 33-65.
  5. Ashley, R & Granger, C W J & Schmalensee, R, 1980. "Advertising and Aggregate Consumption: An Analysis of Causality," Econometrica, Econometric Society, vol. 48(5), pages 1149-67, July.
  6. Johansen, Soren, 1995. "Likelihood-Based Inference in Cointegrated Vector Autoregressive Models," OUP Catalogue, Oxford University Press, number 9780198774501.
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  8. Johansen, Soren, 1988. "Statistical analysis of cointegration vectors," Journal of Economic Dynamics and Control, Elsevier, vol. 12(2-3), pages 231-254.
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