A Study of Economic Growth, Labor Force, and the Open Unemployment Rate in Sigi Regency During 2011-2024

Abstrak

The movement patterns among economic growth, labor force, and unemployment in Sigi Regency are not always aligned, raising questions about how sensitive changes in economic growth and the labor force are to unemployment, and about the causal relationships among these variables. This study aims to analyze the causal relationships between economic growth and unemployment and between the labor force and unemployment, and to analyze the elasticity of economic growth and the labor force with respect to unemployment in Sigi Regency during 2011-2024. The data used are secondary annual time series data sourced from Statistics Indonesia, comprising Gross Regional Domestic Product at Constant Prices, the number of the labor force, and the open unemployment rate. The analytical methods used are the Granger causality test and elasticity analysis with the aid of EViews 13 software. The results indicate that no bidirectional causality was found between economic growth and unemployment, nor between the labor force and unemployment in Sigi Regency, although a one-way causality was found from economic growth to the labor force. The elasticity of economic growth with respect to unemployment fluctuated, ranging from -14.9893 to 24.2146, with most years showing negative values consistent with Okun’s Law. The elasticity of the labor force with respect to unemployment also varied widely, from -26.0182 to 1460.3663, dominated by negative values reflecting the labor market’s capacity to absorb additional labor. These findings affirm that the relationship between economic growth and unemployment at the regional level is contextual and influenced by the local economic structure.