Determining Demand for Help-Wanted Advertising

Abstract

The purpose of this thesis is to investigate how the price of advertising space affects the demand for help-wanted advertising. To do so, this thesis develops and estimates an econometric model to explain and predict the demand for help-wanted advertising placed in a newspaper. For the most part, economic theory and the literature suggest that basic economic and demographic factors explain the demand for help-wanted advertising. The literature and empirical studies confirm an inverse relationship exists between unemployment rates and help-wanted advertising. This thesis confirms these findings using firm specific data for a major metropolitan newspaper. Surprisingly few other studies explore whether the price for advertising is also an important determinant of demand. My model includes both unemployment data and average price of help-wanted ads and finds that price is an important determinant for the demand for help-wanted advertising. Closer scrutiny of these relationships should remove some of the uncertainty associated with what now appears to be a volatile demand.