Modeling the Open Unemployment Rate in Indonesia Using Panel Data Regression Analysis

Abstract

Indonesia has entered the peak of the demographic bonus which can provide positive and negative impacts for various fields. One of them is in the economic field, namely the increasing number of productive population who are unabsorbed in the world of work and is referred to as an open unemployment. This research was conducted to build a model and to analyze the Open Unemployment Rate, Economic Growth, Provincial Minimum Wage, Level of education, Population growth, Labor Force Participation Rate, Employment, Human Development Index, Poor Residents, Illiterate Population, Average Length of School, Domestic Investment, Foreign Investment, and School Participation Rate, that influence the open unemployment rate in Indonesia using panel data regression analysis with data 2015-2021 from 34 provinces. A fixed effect model with different intercept values for every participant is the best panel data regression model (Fixed Effect Model) that could be found. Based on simultaneously research, it was discovered that every component of the model significantly effect the open unemployment rate. Partially, it was discovered that the following factors significantly effect the open unemployment rate in Indonesia: Employment, Labor Force Participation Rate, Economic Growth, Population Growth, Human Development Index, Poor Population, and Average years of Schooling.