The Impact of Investment and Government Spending on the Unemployment Rate

Authors : Nurhidayati Islamiah; Muhammad Yusri Zamhuri; Rahmatia; Abdul Hamid Paddu

Volume/Issue : Volume 6 - 2021, Issue 1 - January

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Unemployment is a very complex problem because it affects and is influenced by several factors that interact with each other, following a pattern that is not always easy to understand, and until now, the government has not been able to overcome. The research was conducted to observe and analyze the dominant factors affecting the ratio of the unemployment rate in terms of investment level variables and government spending. The research method with quantitative data using secondary data is obtained from macroeconomic data from the Indonesian government for 2003 – 2018, including data on government investment level, data on government spending levels, and data on unemployment rates. Hypothesis testing in this study was carried out using the panel data regression analysis method, which examines the relationship between one variable's effects on another using the IBM SPSS 22 program. The analysis shows that the level of government spending significantly affects the ratio of the unemployment rate. The high investment value will create new jobs, which will indirectly reduce the unemployment rate. Many open unemployment rates have broad social implications because those who do not work have no income. However, this will be maximally achieved if the government can manage the investment optimally.

Keywords : Economic Development; Development Disparity; Economic Growth; Macroeconomic


Paper Submission Last Date
31 - October - 2021

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