Does Economic Growth, Wage Rate, and Industrial Development Matter for Labor Absorption?

Dirta Pratama Atiyatna; Ichsan Hamidi; Trie Sartika Pratiwi; Hamira Hamira

doi:10.29259/jep.v21i1.19172

Does Economic Growth, Wage Rate, and Industrial Development Matter for Labor Absorption?

Dirta Pratama Atiyatna, Ichsan Hamidi, Trie Sartika Pratiwi, Hamira Hamira

Abstract

The dimensions of employment problems are not just limited field or job opportunities and low productivity but are much more serious with different causes. This study aims to determine the effect of the rate of economic growth, economic growth, minimum wages, and the number of industrial units on employment in South Sumatra Province. The data analysis method used in this study is a quantitative analysis method using panel data regression and usage. This research covers a broad scope, namely as many as 17 districts/cities in South Sumatra for 6 years (2014-2019). Based on the results of the analysis and discussion that has been carried out, it can be concluded that the districts/cities in South Sumatra Province in 2016-2019 had the highest employment by looking at the Random Effect Model (REM) labor estimation coefficient which shows that the highest employment is in Palembang City at 75,452,015. Meanwhile, the lowest value is in the Ogan Ilir district at 68,194,663.

Keywords

Labor Absorption, Economic Growth, Minimum Wage, Number of Industries

Full Text:

PDF

References

Arrowsmith, J., & Parker, J. (2023). Employer Perspectives on the Living Wage and Minimum Wage During Covid: Evidence from New Zealand. Labour and Industry, 33(1), 102–122. https://doi.org/10.1080/10301763.2022.2160292

Atiyatna, D. P., Bashir, A., & Hamidi, I. (2021). Identifying Factors Influencing the Labor Productivity of SMEs in South Sumatra. Jurnal Ekonomi Pembangunan, 19(1), 91–100. https://doi.org/10.29259/jep.v19i1.13111

Campante, F., & Yanagizawa-Drott, D. (2018). Long-Range Growth: Economic Development in the Global Network of Air Links. Quarterly Journal of Economics, 133(3), 1395–1458. https://doi.org/10.1093/qje/qjx050

Gherghina, S. C., Botezatu, M. A., Hosszu, A., & Simionescu, L. (2020). Small and Medium-Sized Enterprises (SMEs): The Engine of Economic Growth through Investments and Innovation. Sustainability, 12(347). https://doi.org/10.3390/su12010347

Habanabakize, T., Meyer, D. F., & Oláh, J. (2019). The Impact of Productivity, Investment and Real Wages on Employment Absorption Rate in South Africa. Social Sciences, 8(12), 1–15. https://doi.org/10.3390/socsci8120330

Industrial Department of South Sumatra Province. (2020). Number of Units Industrial District / City of South Sumatra Province.

Jaya, T. J., & Kholilah. (2020). Effect of Gross Domestic Regional Bruto, Provincial Minimum Wage, and Investment on Labor Absorption. Jurnal Ekonomi Bisnis Dan Kewirausahaan, 9(3), 236. https://doi.org/10.26418/jebik.v9i3.42642

Kahn, R. F. (2022). Unemployment as Seen by the Keynesians (M. C. Marcuzzo & P. Paesani (eds.)). Springer International Publishing. https://doi.org/10.1007/978-3-030-98588-2_11

Li, H., Sajjad, N., Wang, Q., Ali, A. M., Khaqan, Z., & Amina, S. (2019). Influence of Transformational Leadership on Employees’ Innovative Work Behavior in Sustainable Organizations: Test of Mediation and Moderation Processes. Sustainability, 11(1594). https://doi.org/10.3390/su11061594

McMillan, M., & Zeufack, A. (2022). Labor Productivity Growth and Industrialization in Africa. Journal of Economic Perspectives, 36(1), 3–32. https://doi.org/10.1257/jep.36.1.3

Orhan, A., Kirikkaleli, D., & Ayhan, F. (2019). Analysis of Wavelet Coherence: Service Sector Index and Economic Growth in an Emerging Market. Sustainability, 11(6684). https://doi.org/10.3390/su11236684

Pahl, S., & Timmer, M. P. (2020). Do Global Value Chains Enhance Economic Upgrading? A Long View. Journal of Development Studies, 56(9), 1683–1705. https://doi.org/10.1080/00220388.2019.1702159

Pratama, R. P., Muhammad, S., & Silvia, V. (2020). Do Minimum Wage and Economic Growth Matter for Labor Absorption in Sumatra Island , Indonesia ? East African Scholars Journal of Economics, Business and Management, 13(1), 54–61. https://doi.org/10.36349/EASJEBM.2020.v03i01.07

Purmini, & Rambe, R. A. (2021). Labor and Government Policies on Poverty Reduction in Sumatera Island, Indonesia. Jurnal Ekonomi Pembangunan, 19(1), 61–74. https://doi.org/10.29259/jep.v19i1.13775

Riley, R., & Bondibene, C. R. (2017). Raising the Standard: Minimum Wages and Firm Productivity. Labour Economics, 44(27–50). https://doi.org/10.1016/j.labeco.2016.11.010

Rizqi, H. P., Kusumastuti, S. Y., Nurfianingrum, E., & Syafri. (2022). Labour Absorption in the Manufacturing Industry Sector in Central Java Province Indonesia. Asean International Journal of Business, 1(1), 59–67. https://doi.org/10.54099/aijb.v1i1.73

Sen, K. (2019). What Explains the Job Creating Potential of Industrialisation in the Developing World? Journal of Development Studies, 55(7), 1565–1583. https://doi.org/10.1080/00220388.2017.1404033

Soylu, Ö. B., Çakmak, ?., & Okur, F. (2018). Economic Growth and Unemployment Issue: Panel Data Analysis in Eastern European Countries. Journal of International Studies, 11(1), 93–107. https://doi.org/10.14254/2071-8330.2018/11-1/6

Statistics of South Sumatra Province. (2020). Labor Force Participation Rate, Provincial Minimum Wage, and Gross Regional Domestic Product in South Sumatra Province 2014-2019.

Surya, B., Menne, F., Sabhan, H., Suriani, S., Abubakar, H., & Idris, M. (2021). Economic Growth, Increasing Productivity of SMEs, and Open Innovation. Journal of Open Innovation: Technology, Market, and Complexity, 7(1), 1–37. https://doi.org/10.3390/joitmc7010020

Tegep, J., Suratman, E., & Indra, S. (2019). The Failure of Foreign Direct Investment to Explain Unemployment Rate and the Mediating Role of Economic Growth and Minimum Wage. International Journal of Economics and Financial Issues, 9(2), 154–161.

Vermeulen, B., Kesselhut, J., Pyka, A., & Saviotti, P. P. (2018). The Impact of Automation on Employment: Just the Usual Structural Change? Sustainability, 10(1661). https://doi.org/10.3390/su10051661

DOI: https://doi.org/10.29259/jep.v21i1.19172

Refbacks

There are currently no refbacks.

This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.

Jurnal Ekonomi Pembangunan
Jalan Raya Palembang-Prabumulih Km. 32
Jurusan Ekonomi Pembangunan, Fakultas Ekonomi Universitas Sriwijaya
Indralaya, Sumatera Selatan, Indonesia
Email: jep.unsri@gmail.com, Tel/Fax : (0711)580231

p-ISSN: 1829-5843, e-ISSN 2685-0788