Analysis of the Effect of Education Level, Minimum Wage, and Gross Regional Domestic Product on the Open Unemployment Rate in Banten Province

Rizky Wahyu Pranata; Sishadiyati Sishadiyati

doi:10.55927/fjmr.v5i3.28

Authors

Rizky Wahyu Pranata Universitas Pembangunan Nasional “Veteran” Jawa Timur
Sishadiyati Sishadiyati Universitas Pembangunan Nasional “Veteran” Jawa Timur

DOI:

https://doi.org/10.55927/fjmr.v5i3.28

Keywords:

Open Unemployment Rate, Education, Provincial Minimum Wage, GRDP, Banten Province

Abstract

Unemployment is an important issue in regional economic development because it has a direct impact on community welfare. Banten Province is recorded as one of the provinces with the highest open unemployment rate (TPT) in Indonesia despite having relatively developed economic growth and industrial areas. This study aims to analyze the effect of education level, provincial minimum wage (UMP), and Regional Gross Domestic Product (PDRB) on the Open Unemployment Rate in Banten Province during the period 2014–2023. The study uses a quantitative approach with a descriptive-explanatory method and utilizes panel data sourced from the Central Statistics Agency (BPS). The analysis technique used is panel data regression with the Fixed Effect Model (FEM). The results show that the level of education, measured by the average length of schooling, has a negative and significant effect on the OUR, meaning that an increase in education can reduce the unemployment rate. Conversely, the UMP has a positive and significant effect on the TPT, indicating that an increase in the minimum wage tends to increase unemployment if it is not balanced with an increase in labor productivity. Meanwhile, the PDRB has a negative but insignificant effect on the TPT, indicating that economic growth in Banten Province is not yet inclusive and has not been able to optimally absorb labor. Simultaneously, all three variables have a significant effect on the OUR. These findings emphasize the need for integrated policies that combine improvements in education quality, balanced wage setting, and economic development oriented toward job creation.

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