Investigating the Interplay of Socioeconomic Inequalities and Unemployment on Indonesia’s Economy

Abstract

This study explores the impact of income inequality, human development, gender empowerment, and open unemployment on economic growth across Indonesia’s 34 provinces over the period 2015 to 2022. Employing panel data regression techniques, the study utilizes both cross-sectional and time-series data to analyze regional variations and trends. The Random Effects Model was identified as the most appropriate model for this analysis based on statistical tests and model selection criteria. The findings indicate that income inequality and open unemployment have a statistically significant negative effect on economic growth. In contrast, improvements in human development and gender empowerment are shown to positively and significantly influence economic performance. These results highlight the importance of addressing structural disparities and enhancing social development indicators to achieve more inclusive and sustainable economic outcomes. The study suggests that equitable income distribution and strategic government investments in infrastructure, education, and healthcare can improve the quality of human capital, thereby supporting long-term growth. Furthermore, gender empowerment through policies promoting equal access to opportunities and decision-making roles can serve as a catalyst for broader economic participation and productivity. To address the adverse effects of unemployment, the government should focus on creating diverse employment opportunities and fostering entrepreneurship to enable income generation at the community level. Overall, the study underscores the need for a multidimensional policy approach that integrates economic, social, and gender considerations to promote inclusive and sustainable economic growth across Indonesia.