Exploring the Elasticity of Job Opportunities between Regions in Indonesia

Abstract

This study aims to analyze and explain the influence of education level, wages, poverty rate, the informal sector, and economic growth on employment opportunities. Furthermore, the study will explain the conditions and differences in employment opportunities across three regions: Western Indonesia (WIB), Central Indonesia (WITA), and Eastern Indonesia (WIT). This quantitative study utilizes path analysis as a statistical tool to estimate the parameters of a variable. The results show that education level significantly decreases employment opportunities in the WIT region, while economic growth has no significant effect on employment opportunities in the three regions. Furthermore, wage increases significantly decrease employment elasticity in both WIB and WITA regions, while the effect is insignificant in WIT. Poverty negatively impacts employment opportunities in Region 2, while the effect is positive but not significant in the other two regions. The informal sector significantly impacts employment opportunities in the three regions. Furthermore, employment opportunities, as measured by employment elasticity, differ significantly between regions. The region with the highest elasticity is WIB, which never reaches negative elasticity, while the other two regions still experience negative elasticity. WITA in 2023 has experienced positive elasticity, but WIT remains negative even though it previously experienced positive elasticity in 2020.