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The Impact Of Macroeconomic Variables On Labor Absorption In Sumatra Island

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  • Yusuf Eko Septiandi Nugroho
  • Yunisvita

Abstract

The role of macroeconomic variables in labor absorption in Sumatra is a crucial aspect in supporting regional economic development. This study aims to analyze the influence of economic growth, open unemployment rate, investment, and provincial minimum wage on labor absorption in 10 provinces in Sumatra during the period 2014–2023. This quantitative research method uses secondary data from the Central Statistics Agency and the Investment Promotion Agency, with a sample of 100 observations. Data analysis was conducted using multiple linear regression of panel data with the Fixed Effect Model (FEM) approach, as well as classical assumption tests and hypothesis testing. The results indicate that economic growth and open unemployment rates have no significant effect. Investment has a negative and significant effect, due to the dominance of capital-intensive investments with low labor absorption. Conversely, provincial minimum wages have a positive and significant effect. Policy implications include the need to strengthen labor-intensive investments, improve labor quality, and adjust minimum wages based on productivity to promote sustainable labor absorption in Sumatra.

Suggested Citation

  • Yusuf Eko Septiandi Nugroho & Yunisvita, 2025. "The Impact Of Macroeconomic Variables On Labor Absorption In Sumatra Island," Journal of Smart Economic Growth, , vol. 10(1), pages 35-50, May.
    • Handle: RePEc:seg:012016:v:10:y:2025:i:1:p:35-50
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