Determinants of the Open Unemployment Rate in Six Selected Provinces in Indonesia
DOI:
https://doi.org/10.37385/rsjw2g62Keywords:
Open unemployment rate; economic growth; population growth; Human Development Index (HDI); regional labor market; panel data regressionAbstract
Open unemployment remains one of the major challenges in Indonesia's labor market despite continued economic development. Previous studies have generally examined the determinants of unemployment at the national level or across all provinces, while research focusing specifically on provinces with persistently high unemployment rates remains limited. This study aims to analyze the effects of economic growth, population growth, and human resource quality on the Open Unemployment Rate (OUR) in six Indonesian provinces with the highest unemployment rates DKI Jakarta, West Java, Banten, Riau Islands, North Sulawesi, and Maluku during the 2015–2025 period. The novelty of this study lies in examining these three determinants simultaneously using panel data regression in provinces with persistently high unemployment rates. This study employed a quantitative approach using secondary data obtained from Statistics Indonesia (BPS). Based on the model selection tests, the Random Effects Model (REM) was identified as the most appropriate estimation model. The results indicate that economic growth and human resource quality have a negative and statistically significant effect on the Open Unemployment Rate, whereas population growth has a negative but statistically insignificant effect. Collectively, all independent variables significantly affect the Open Unemployment Rate. The model explains 65.01% of the variation in the Open Unemployment Rate (R² = 0.6501), while the remaining 34.99% is explained by other factors outside the model. These findings suggest that strengthening economic growth and improving human resource quality are essential strategies for reducing unemployment, particularly in provinces with persistently high unemployment rates.
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