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Case Studies | Economics | Indonesia | Volume 11 Issue 3, March 2022

Analysis of Factors Affecting Labor Absorption in the Province of the Riau Islands

Agus Tri BASUKI | Ayu Indah LESTARI

Abstract: This study aims to analyze the effect of the labor force, Regency/ City Minimum Wage, investment and economic growth on employment in the Riau Islands Province in 2010-2019. This study uses secondary data in the form of panel data. The analysis method used in this research is panel data regression with the Fixed Effect Model (FEM) model. The data used in the study were obtained from the Central Statistics Agency (BPS) and the Riau Islands Province Manpower and Transmigration Service Report. The results of the analysis show that the labor force and investment have a significant positive effect on employment in the Riau Islands Province. While the Regency/City Minimum Wage and economic growth has a negative influence on employment in the Riau Islands Province. The high MSE and low labor productivity have caused companies to replace workers with production machines (capital intensive).

Keywords: labor absorption, district minimum wage, investment, economic growth

Edition: Volume 11 Issue 3, March 2022,

Pages: 321 - 326