The Dynamics of Gross Regional Domestic Product, Labor Force Participation Rate, and Poverty on the Open Unemployment Rate: Evidence from Panel Data in the Gerbangkertosusila Metropolitan Area, 2012–2024

Abstract

This study aims to analyse the effect of Gross Regional Domestic Product (GRDP), Labor Force Participation Rate (LFPR), and the percentage of poor population on the Open Unemployment Rate in the Gerbangkertosusila region during the period 2012–2024. The study employed a quantitative approach using panel data regression analysis on seven regencies/cities in the Gerbangkertosusila area. The data used were secondary data obtained from the Central Statistics Agency (Badan Pusat Statistik/BPS). The model selection results indicated that the most appropriate model was the Fixed Effect Model (FEM) with robust standard errors. The results showed that GRDP had a negative relationship but did not significantly affect the Open Unemployment Rate. Meanwhile, the Labor Force Participation Rate (LFPR) had a positive and significant effect on the Open Unemployment Rate, while the percentage of poor population had a negative and significant effect on the Open Unemployment Rate. The negative relationship indicates that low-income communities tend to continue working in the informal sector or vulnerable employment, causing them not to be fully classified as openly unemployed. Simultaneously, GRDP, LFPR, and the percentage of poor population significantly affected the Open Unemployment Rate in the Gerbangkertosusila region. However, the relatively low within R-squared value indicates that the Open Unemployment Rate is also influenced by other factors outside the research model. Therefore, local governments are expected to improve job creation policies, develop labor-intensive sectors, and enhance the quality of human resources to reduce the Open Unemployment Rate in the Gerbangkertosusila region.