Balance: Jurnal Ekonomi
Vol. 22 No. 1 (2026): June 2026

Determinants of Open Unemployment in Indonesia: The Role of Average Length of Schooling, Minimum Wage, and Economic Growth

M. Deni Damara (State University of Medan)
Kautsar Fatin Dharmawan Nasution (State University of Medan)
Bunga Ananda (Universitas Negeri Medan )
Cindy Eleonora Sitohang (State University of Medan)
Era Widia Br. Sinaga (State University of Medan)
Elisa Clara Saragih (State University of Medan)
Melani Manginar Sirait (State University of Medan)
Relli Anisma Hutabalian (Universitas Negeri Medan )
Noni Rozaini (Universitas Negeri Medan)



Article Info

Publish Date
30 Jun 2026

Abstract

Open unemployment remains one of the most persistent socioeconomic challenges in Indonesia, despite continuous improvements in macroeconomic performance and labor market policies. This study investigates the effects of Average Length of Schooling (ALS), Minimum Wage (MW), and Economic Growth (EG) on the Open Unemployment Rate (OUR) in Indonesia over the 2015–2024 period. A descriptive-verificative quantitative approach was employed using annual secondary data obtained from Statistics Indonesia (BPS). The data were analyzed using multiple linear regression with EViews software. Prior to hypothesis testing, the model was evaluated through classical assumption tests, while the significance of the relationships was assessed using the t-test, F-test, and coefficient of determination (R²). The empirical findings indicate that, individually, Average Length of Schooling and Minimum Wage do not have a statistically significant effect on the Open Unemployment Rate. In contrast, Economic Growth has a significant negative effect, indicating that higher economic growth contributes to lower unemployment levels by expanding employment opportunities and stimulating productive economic activities. Simultaneously, the three independent variables significantly influence the Open Unemployment Rate, with an R² value of 0.82, suggesting that the model explains approximately 82% of the variation in unemployment during the study period. These findings emphasize that sustainable economic growth remains the primary driver of employment creation, whereas education and wage policies require stronger alignment with labor market demands. The study provides empirical evidence for policymakers to formulate integrated, inclusive, and sustainable employment strategies that enhance workforce competitiveness and support long-term economic development.

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Journal Info

Abbrev

jeb

Publisher

Subject

Economics, Econometrics & Finance

Description

Balance: Jurnal Ekonomi has p-ISSN 1858-2192 and e-ISSN 2686-5467 published by the Development Economics Study Program of the Faculty of Economics and Business, Muhammadiyah University of Makassar, this journal publishes research articles in the field of Economics. This journal publishes research ...