Open AccessDeterminants of Unemployment in the Large and Medium Industrial Sector in Indonesia
Author(s) -
Tarmizi Zulkifli Abdurachman,
Sofyan Syahnur,
Putri Bintusy Syathi
Publication year - 2021
Publication title -
international journal of global operations research
Language(s) - English
Resource type - Journals
eISSN - 2723-1747
pISSN - 2722-1016
DOI - 10.47194/ijgor.v2i3.113
Subject(s) - unemployment , economics , labour economics , foreign capital , profit (economics) , indonesian , capital (architecture) , unemployment rate , foreign direct investment , macroeconomics , history , linguistics , philosophy , archaeology , microeconomics
As a country with the second-highest unemployment rate, Indonesian policymakers should worry about this condition. Based on the macroeconomic perspective, unemployment is affected by the firms' labour demand. It highlights that the firm's profit or loss highly determines the labour force demand. Using the Fixed Effect Model, this study results show that the labour force significantly affects industrial output, and the changes of industrial output highly increase the labour demand in the market. However, foreign and domestic capital neither significantly reduce unemployment rate in Indonesia nor stimulate the large and medium industries to absorb labour in the market. The Government should utilize foreign and domestic capital efficiently as possible to reduce unemployment rate.