Abstract
This study aims to determine how the results of Phillips theory testing in 34 provinces in Indonesia based on the main sectors contributing to the GRDP. The analytical method used in this study is Product Moment correlation analysis to determine the relationship between the inflation rate variable and the unemployment rate variable. The data used in this study are data on open unemployment and inflation rates taken in 34 provinces in Indonesia from 2014-2018. The results of this study indicate there is no Phillips curve pattern in 34 provinces in Indonesia. The inflation rate variable and the unemployment rate variable in 34 provinces in Indonesia based on the main sectors contributing to the GRDP have a positive but very weak relationship with a correlation value of 0.1089. The problem of price volatility (inflation) contributes, although not significantly to the emergence of the unemployment problem. Government policies are needed to control inflation and reduce unemployment rates such as fuel subsidies, corporate tax reductions, export tax reductions, and control of raw material prices considering that the results of this study indicate that rising inflation will be followed by an increase in unemployment.
Highlights
Unemployment and inflation are two of the three main problems in macroeconomic indicators
Correlation analysis results and significance tests, to find out the direction and level of relationship between variables in this study, correlation analysis and significance test include correlation test and significance test in 34 provinces combined, correlation test and significance test in the province with the industrial sector as the main sector. pdrb contributor as well as the correlation test and significance test in provinces with non-industrial sectors as the main sectors contributing to the grdp. the results of the correlation test and significance test are as follows: Table 2
The correlation value is in the coefficient interval between 0,000-0,199 which means that the relationship between the open unemployment rate variable and the inflation variable in 34 provinces in Indonesia is very low
Summary
Unemployment and inflation are two of the three main problems in macroeconomic indicators. The correlation value between the open unemployment rate and the inflation rate (case studies in 11 provinces of the industrial sector) is 0.0846 with a count of 0.6202.
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