Indonesian Journal of Advanced Research (IJAR)
Vol. 5 No. 9 (2026): September 2026

The Impact of the Unemployment Rate and the Number of People Living in Poverty on the Labor Participation Rate in Indonesia, 2020–2024

Hermawan Febriansyah (Ekonomi, Fakultas Ekonomika dan Bisnis, Universitas Negeri Surabaya)
Hendry Cahyono (Ekonomi, Fakultas Ekonomika dan Bisnis, Universitas Negeri Surabaya)



Article Info

Publish Date
21 Sep 2026

Abstract

Indonesia faces complex labor market challenges in the post Covid-19 pandemic era, characterized by an economic recovery that is not matched by adequate labor absorption. The dynamic Open Unemployment Rate (OUR) and the number of poor populations are suspected to influence individuals' decisions to participate in the labor force. This study aims to analyze the influence of the OUR and the number of poor populations on the Labor Force Participation Rate (LFPR) in Indonesia during the 2020-2024 recovery period. A quantitative research method was applied using data from 34 provinces sourced from the Central Statistics Agency (CSA). Panel data regression analysis with the Fixed Effects Model (FEM), selected through the Chow and Hausman tests, served as the main approach. The results indicate that, simultaneously, the OUR and poverty significantly affect the LFPR. Partially, the OUR has a negative influence, confirming the dominance of the discouraged worker effect, while poverty has a positive influence, reflecting the necessity to work mechanism in the Indonesian economic context. These findings underscore the need for holistic policies in addressing unemployment and poverty to enhance optimal labor force participation.

Copyrights © 2026






Journal Info

Abbrev

ijar

Publisher

Subject

Civil Engineering, Building, Construction & Architecture Computer Science & IT Decision Sciences, Operations Research & Management Education Languange, Linguistic, Communication & Media

Description

Indonesian Journal of Advanced Research (IJAR) is an open-access and peer-reviewed journal, published by Formosa Publisher, which is mainly intended for the dissemination of research results by researchers, academics, and practitioners in many fields of science and technology. IJAR publishes ...