Analysis of the Economic Development and Tourism Linkage to the Unemployment Rate

Abstract

Economic development is basically a series of policy efforts aimed at improving people's living standards, directing income distribution, and expanding employment opportunities. In an effort to achieve economic development goals, limited employment opportunities often become a major problem. Unemployment is a complex problem because it affects and is affected by various interrelated factors. This study aims to analyze the effect of inflation, foreign investment, provincial minimum wage and the number of domestic tourists on the open unemployment rate in Java Island. This research uses quantitative methods and uses panel data for the period 2016-2021 with observations of 6 provinces in Java Island. The data analysis method uses panel data regression. Based on the model selection test with the Chow Test and the Hausmann Test, the results show that the fixed effect model is the right model to use in this study. The results show that the inflation variable and the number of domestic tourists have a negative and significant effect on the open unemployment rate. The provincial minimum wage variable has a positive and significant effect on the open unemployment rate. Meanwhile, the variable of foreign investment has a negative and insignificant effect on the open unemployment rate.