Open Unemployment Rate Modeling in The Province of Jawa Timur in 2019-2021 using Data Panel Regression Method

Abstract

Unemployment is an essential indicator in the employment sector, where the unemployment rate could measure to what extent the existing field jobs can absorb the labor force. Based on BPS’s data, the total population in Jawa Timur in 2019 was 39,70 million people, the second most populated province in Indonesia after West Java. This number increases every year until 2021 to 40,88 million people. This increase resulted in a greater labor force than demand, so unemployment emerged. Therefore, further analysis of factors affecting Jawa Timur's open unemployment rate in 2019-2021 is needed. This study will use a data panel regression method which combines time series data and cross-section. Besides getting a panel regression model of the open unemployment rate, the characteristics of the open unemployment rate and factors that are suspected to affect it will be analyzed. The estimation results from this panel regression give the best model, the Fixed Effect Model (FEM). The significant variable is the Economic Growth Rate, Minimum Wages of District/City, and Total Population, with a coefficient of determination of 92.90 percent.