Determinant Analysis of Labor Absorption in the Manufacturing Industry Sector in Sulawesi Island (2010-2019)

Abstract

This research aims to analyze the factors that influence the absorption of labor on the island of Sulawesi, Indonesia. In addition, to contribute or provide input to the employment situation and the performance of economic development in the Sulawesi region in particular and in Indonesia in general. This research was conducted in all provinces on the island of Sulawesi with simultaneous equation model analysis using the Stata application. The period of this research is 2010-2019. This research uses panel information with the variables of Minimum Wage, Number of Businesses, Investments as aspects that affect employment, either directly or indirectly through the GRDP of the Manufacturing Industry Zone. The results of the research found that the variables of the Provincial Minimum Wage, Number of Business Units, Investment and GRDP had a significant positive direct influence on the absorption of labor in the manufacturing industry zone. As well as the investment variable on GRDP has a significant negative direct influence and while for indirect influence Investment on labor through GRDP output has a negative influence. The results of this research are also taken into consideration in determining the most important economic policy regarding the pattern of economic development as a dimension of the nation's progress.