Regional Patterns of Digital Skills Mismatch in Indonesia’s Digital Economy: Insights from the Indonesia Digital Society Index

Abstract

This study investigates regional heterogeneity and spatial interdependence in digital skills mismatch across Indonesia by constructing a Digital Skills Supply–Demand Ratio (DSSDR) from the Indonesia Digital Society Index (IMDI). In line with SDG 10 (Reduced Inequalities) and SDG 4 (Quality Education), the study aims to provide policy-relevant evidence to support a more inclusive and balanced digital transformation. Using district-level data and spatial econometric models (OLS, SAR, and the SDM), the analysis evaluates both local determinants and cross-regional spillover effects. Model comparison identifies the Spatial Durbin Model as the best specification, revealing strong spatial dependence in digital skills imbalance. The results show that most local socioeconomic and digital readiness indicators do not have significant direct effects on DSSDR, while school internet coverage exhibits a consistently negative association, indicating that digital demand expands faster than local supply. In contrast, spatial spillovers are decisive: a higher share of ICT study programs in neighboring regions improves local DSSDR through knowledge and human-capital diffusion, whereas higher GRDP per capita in adjacent regions exacerbates local mismatch, consistent with a talent-attraction mechanism. These findings demonstrate that digital skills mismatch is a spatially interconnected phenomenon driven more by interregional dynamics than by local conditions alone, implying that policy responses should move beyond isolated district-level interventions toward coordinated regional strategies integrating education systems, labor markets, and digital ecosystem development. The study contributes a spatially explicit, supply–demand-based framework for diagnosing regional digital inequality and supporting more equitable and sustainable digital development in Indonesia.