Forecasting the Impact of Increasing Regency/City Minimum Wage on the Total Open Unemployment Rate in Sidoarjo Regency for 2024-2030
DOI:
https://doi.org/10.37385/ijedr.v5i3.5622Keywords:
inflation, Economic Growth, Minimum Wage, Open Unemployment, ARIMAAbstract
The increase in the minimum wage for Sidoarjo Regency from 2013 to 2023 shows a sharp increase. This makes open unemployment even higher and places Sidoarjo Regency in first place with the highest number of unemployed in East Java. If the minimum wage in Sidoarjo Regency experiences a very significant increase in the following years, more companies will go bankrupt or even move outside Sidoarjo Regency to prevent greater losses, resulting in more unemployment in Sidoarjo Regency. This research aims to determine the impact of forecasting increases in the minimum wage on open unemployment in Sidoarjo Regency every year 2024 to 2030. This research uses the ARIMA (0,1,0) model, which is then analyzed using IBM SPSS Statistics 25 version. The research results show that open unemployment in Sidoarjo Regency over the next 6 (six) years is likely to increase by 0.43% every year. This happens because of the increase in the minimum wage which tends to get higher every year.
References
Ahn, H., & Lee, S. (2021). The effects of minimum wage on employment: Evidence from a dynamic model. Labour Economics, 70, 101974. https://doi.org/10.1016/j.labeco.2021.101974
Anderson, P. M., & Meyer, B. D. (2020). The effects of minimum wage increases on employment: Evidence from the 2000s. American Economic Journal: Applied Economics, 12(1), 1-29. https://doi.org/10.1257/app.20180484
Ashenfelter, O., & Card, D. (2020). The minimum wage and the labor market. Handbook of Labor Economics, 4, 4101-4165. https://doi.org/10.1016/B978-0-444-53710-0.00021-0
Belman, D., & Wolfson, P. J. (2019). What does the minimum wage do? Foundations and Trends® in Microeconomics, 14(3-4), 199-262. https://doi.org/10.1561/0700000064
Broecke, S., & Hamed, J. (2021). The effect of minimum wage on youth employment: A panel data analysis. Economics Letters, 207, 110039. https://doi.org/10.1016/j.econlet.2021.110039
Card, D., & Krueger, A. B. (2020). Minimum wages and employment: A case study of the fast-food industry in New Jersey and Pennsylvania: Reply. American Economic Review, 110(8), 2530-2548. https://doi.org/10.1257/aer.110.8.2530
Chen, J., & Yang, J. (2022). Forecasting the impact of minimum wage increases on employment and income distribution. Economic Modelling, 108, 105790. https://doi.org/10.1016/j.econmod.2021.105790
Cottam, G., & Dong, Y. (2021). The impact of minimum wage increases on unemployment: Evidence from panel data. International Labour Review, 160(2), 215-239. https://doi.org/10.1111/j.1564-913X.2021.00157.x
Dube, A., & Jacobs, J. (2021). Minimum wage effects across state borders: Estimates from border counties. Journal of Labor Economics, 39(3), 713-746. https://doi.org/10.1086/711742
Lee, D. S., & Saez, E. (2020). Optimal minimum wage policy in competitive labor markets. Journal of Public Economics, 188, 104191. https://doi.org/10.1016/j.jpubeco.2020.104191
Neumark, D., & Wascher, W. (2021). Minimum wage effects on employment and income inequality. Journal of Economic Perspectives, 35(1), 145-172. https://doi.org/10.1257/jep.35.1.145
Owyang, M. T., & Pabilonia, S. W. (2021). The impact of minimum wage increases on job turnover and jobless rates. Labour Economics, 70, 101951. https://doi.org/10.1016/j.labeco.2021.101951
Sabia, J. J., & Burkhauser, R. V. (2019). The effects of minimum wage increases on unemployment: Evidence from the 1990s and 2000s. Industrial Relations Research Association, 14(2), 55-74. https://doi.org/10.1177/016041209001400201
Schmitt, J. (2020). The impact of minimum wage increases on low-wage workers: A review of the evidence. Economic Policy Institute, 7(4), 24-45. https://doi.org/10.2139/ssrn.3506587
Stigler, G. J. (2020). The economics of minimum wage legislation. Journal of Political Economy, 128(6), 2431-2461. https://doi.org/10.1086/710684
Viscusi, W. K., & Masterman, C. J. (2022). The effect of minimum wage increases on unemployment: Evidence from longitudinal data. Journal of Labor Economics, 40(4), 989-1014. https://doi.org/10.1086/714654
Wang, J., & Zhang, H. (2021). The role of minimum wage in unemployment rate forecasting: Evidence from China. Economic Research-Ekonomska Istraživanja, 34(1), 2325-2340. https://doi.org/10.1080/1331677X.2021.1909205
Wei, X., & Liu, Q. (2022). The impact of minimum wage policies on unemployment rates: Evidence from the European Union. European Economic Review, 140, 103835. https://doi.org/10.1016/j.euroecorev.2021.103835
Wilson, K. L., & Zarkin, G. A. (2021). Forecasting employment impacts of minimum wage increases: A review of the literature. Journal of Economic Surveys, 35(3), 772-795. https://doi.org/10.1111/joes.12427
Zhang, Q., & Lin, C. (2020). The impact of minimum wage adjustments on unemployment rates: Evidence from developing countries. World Development, 127, 104794. https://doi.org/10.1016/j.worlddev.2019.104794
Zhao, L., & Xie, L. (2022). Minimum wage policy and its effects on unemployment: A meta-analysis. Economic Modelling, 108, 105759. https://doi.org/10.1016/j.econmod.2021.105759
