Examining the roles of labor factors, investment, and industrialization in poverty alleviation: Empirical evidence from Sumatra, Indonesia

Abstract

AbstractThis article examines the effect of unemployment, laborer education, type of employment, gender, off‐farm worker vulnerability, investment, and industrialization levels on poverty in districts/cities in Sumatra, Indonesia. The study was conducted in 154 districts/cities in Sumatra from 2013 to 2018. Using a panel data regression model, this study found that laborer education, type of employment, gender, and industrialization level positively affected the poverty rate. By comparison, relatively higher levels of worker vulnerability and investment negatively influenced poverty. Unemployment rates did not influence poverty significantly. The policy recommendation for poverty alleviation, therefore, is the creation of jobs in sectors outside of agriculture, especially in the processing industry and service sectors, coupled with improving the quality of workers' performance through skill training. The study contributes to the literature on poverty reduction by providing insight into how labor factors, investment, and industrialization influence poverty.