Strategy on Reducing Unemployment Persistence: A Micro Analysis in Indonesia

Abstract

This study has three main objectives namely: (1) examine the existence of the persistence of unemployment in Indonesia; (2) examine the factors that cause the persistence of unemployment in Indonesia and in some sample areas, and (3) formulate strategies and policy measures needed to reduce the level of unemployment.To achieve these objectives the activities we do is an empirical analysis through the modeling of Econometrics, unemployment accounting, and descriptive statistics. Meanwhile, the data used are secondary data and regional macroeconomic and primary data collected through interviews with workers, the unemployed, firms, bureaucrats, and unions.The study concludes that the persistence of unemployment in Indonesia is disequilibrium persistent unemployment without self correcting mechanism, which means that the persistence occurred outside the labor market equilibrium and has no automatic mechanism to get to the point of equilibrium. In addition, persistence is the result of the slow process of capital accumulation, wage rigidity, the length of job search, and the inertia caused by institutional factors of labor market.The main implication of this study are: (1) the need to improve the quality of growth through hands-on strategy; (2) banking policy and capital markets can lead to acceleration of capital accumulation; (3) monetary policy is more focused on inflation targeting, (4) increased total factor productivity; (5) special incentives for labor-intensive sectors; (6) strengthening vocational education, and (7) antiunemployment programs that are regionally specific.Keywords: Persistent unemployment, Disequilibrium, Wage rigidity, Job search, Indonesia.JEL Classification: J23, J31

Government Policy in Reducing Unemployment in Bone Bolango Regency, Gorontalo Province

“…When unemployment creeps above 6% to 7% and persists stagnant, it means the economy can't create enough new jobs. That's when the government stepped in, (Soekarni et al, 2010). This statement will be in line with the results of research put forward by informants that unemployment reduction has run in accordance with what is stated in the annual work program, for example by placing workers who have passed competency tests in the formal and informal sectors in accordance with their respective fields.…”

“…Because, persistence is still characterized by a trend component that is more dominant than the cyclical component. This type of persistence is characterized by increasing unemployment trends which are shifts in the natural unemployment rate over time, (Soekarni et al, 2010).…”

Determinan Pengangguran Terbuka Menggunakan Pendekatan Geographically Weighted Regression Di Provinsi Sumatera Utara

“…Wilayah kabupaten dengan karakteristik khas agraris, kontur dataran tinggi dan didominasi oleh wilayah pertanian, perkebunan dan kehutanan mempunyai nilai TPT yang rendah. Hal ini diduga karena tingginya serapan angkatan kerja pada sektor pertanian, perkebunan dan kehutanan (Soekarni et al, 2010;Sugianto & Permadhy, 2020;Wijaya et al, 2020).…”

The Determinant of Regional Unemployment in Indonesia: The Spatial Durbin Models

“…An example is research conducted by Kiral and Mavruk (2017), which aims to investigate the unemployment gap and its relationship with the labor market in Turkey. Besides that, Soekarni et al (2009) that examine the persistence of unemployment rates in Indonesia, then identify the factors that cause regional unemployment rates at some point in the area. Second, the regional unemployment model uses spatial econometrics by using cross-section data.…”