Analysis of the Effect of Open Unemployment Rate and Labor Force Participation Rate on Poverty in Aceh Province for the Period 2018-2024

Sartika Cibro; Yuliana Yuliana; Isthafan Najmi; Edi Saputra

doi:10.30601/humaniora.v9i2.7053

Analysis of the Effect of Open Unemployment Rate and Labor Force Participation Rate on Poverty in Aceh Province for the Period 2018-2024

Sartika Cibro, Yuliana Yuliana, Isthafan Najmi, Edi Saputra

Abstract

This study analyzes the effect of the open unemployment rate (TPT) and labor force participation rate (TPAK) on poverty in Aceh Province during 2018–2024. Using panel data from 23 districts/cities and the Common Effect Model—selected through the CHOW and Lagrange Multiplier tests—the results show TPT has a positive and significant impact on poverty, meaning higher unemployment increases poverty levels. Meanwhile, TPAK has a negative and significant effect, indicating that higher labor participation reduces poverty. Simultaneously, both variables significantly influence poverty. The R² value of 0.6867 shows that 68.67% of poverty variation is explained by TPT and TPAK, while 31.33% is influenced by other factors. Policy implications highlight the need for job-creating economic growth, effective labor market matching, targeted skills training, and programs to boost women’s participation. Strengthening the productive sector, expanding decent work, and improving institutional coordination are essential to accelerate poverty reduction. An integrated strategy is urgently needed to reduce unemployment and increase labor participation for inclusive and sustainable welfare in Aceh.

Keywords

Poverty; Open unemployment rate; Labor force participation rate; Aceh

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DOI: https://doi.org/10.30601/humaniora.v9i2.7053

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