The Effect of Poor Population, Open Unemployment Rate, and Domestic Investment on Labor Absorption in East Java in 2020–2024

Bagas Ezar Aflah; Aprillia Nilasari

doi:10.55927/eajmr.v5i4.66

Authors

Bagas Ezar Aflah State University of Surabaya
Aprillia Nilasari State University of Surabaya

DOI:

https://doi.org/10.55927/eajmr.v5i4.66

Keywords:

Poor Population, Open Unemployment Rate, Domestic Direct Investment, Labor Absorption

Abstract

Labor absorption remains a problem in several provinces in Indonesia, particularly East Java. This study aims to analyze the influence of the poor population, the Open Unemployment Rate (TPT), and domestic investment (PMDN) on labor absorption in East Java during 2020–2024. The study employed panel data from 38 districts/cities and used a fixed-effects model (FEM) regression, based on the Chow and Hausman tests. The results show that the poor population and TPT have a negative and significant effect on labor absorption, while domestic investment has a positive and significant effect. Simultaneously, all three variables are significant and able to explain 69.68% of the variation in labor absorption. Consequently, PMDN investment is needed to optimize labor absorption and reduce poverty and unemployment.

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