International Journal of Entrepreneurship (Print ISSN: 1099-9264; Online ISSN: 1939-4675)


A longitudinal analysis of the effect of wages, inflation, economic growth on unemployment rate in Maluku province, Indonesia

Author(s): Teddy Christianto Leasiwal

This study investigated empirically the relationship between the unemployment rate and wages, inflation and economic growth in Maluku by using the longitudinal data from 2007-2019. The analytical method used in analyzing the data is an econometric model. The data analysis method used is multiple linear functions by integrating existing variables with an ordinary least squares model (ordinary least square/OLS). Furthermore, statistical tests such as coefficient determination (R2) test, F-test, T-test and classical assumption tests of multicollinearity, heteroscedasticity, autocorrelation and normality test were also conducted. The results showed that simultaneously, the independent variable in this case the level of wages, inflation, and economic growth (GRDP) is able to influence the dependent variable, namely the unemployment rate positively and significantly of 74.25%. The wage variable has a positive and significant influence on the unemployment, while the inflation variable affects positively but not significantly the unemployment rate. The variable of economic growth which is proxied by GRDP has a negative relationship with the unemployment rate, so that GRDP growth will directly reduce the unemployment rate. The findings theoretically demonstrated that increased economic growth is more likely to provide new job opportunities and are labor-intensive economic growth reduces the number of unemployed.

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