JRSSEM 2022, Vol. 02 No. 4, 544 – 554

E-ISSN: 2807 - 6311, P-ISSN: 2807 - 6494

10.36418/jrssem.v2i04.308 https://jrssem.publikasiindonesia.id/index.php/jrssem

THE EFFECT OF EDUCATION LEVEL, ECONOMIC GROWTH,

ALLOCATION OF GOVERNMENT EXPENDITURE, AND THE

NUMBER OF POOR PEOPLE ON UNEMPLOYMENT IN BALI

PROVINCE IN 2017-2020

Nico Candra Pratama

Maulidyah Indira Hasmarini

1,2

Muhammadiyah University of Surakarta, Indonesia

e-mail: nicocandra02@gmail.com, mi148@ums.ac.id

*Correspondence: nicocandra0[email protected]

Submitted

: 09 November 2022

Revised

: 18 November 2022

Accepted

: 28 November 2022

Abstract: The purpose of this study is to measure the direction and magnitude of the influence of

education levels, economic growth, allocation of government expenditure, and the number of poor

people unemployed in Bali in 2017-2020. The analysis method used is the Panel Least Square (PLS)

regression method with

cross sections

covering 8 regencies and 1 city in Bali province, namely:

Jembrana Regency, Tabanan Regency, Badung Regency, Gianyar Regency, Klungkung Regency,

Bangli Regency, Karangasem Regency, Buleleng Regency, Denpasar City. And this research uses a

time series starting from 2017-2020. Independent variables used to explain the factors influencing

the unemployment rate are the level of education, economic growth, goverment expenditure

allocation, and the number of poor people.

Keywords: Unemployment, Education Level, Economic Growth, Government Expenditure

Allocation, and Number of Poor People, PLS.

Nico Candra Pratama, Maulidyah Indira Hasmarini | 545

INTRODUCTION

Bali Province is one of the regions that

has world famous tourist destinations that

attract local and foreign tourists, where Bali

Province relies on this attraction for the

economy and dependence on tourism. It

turns out that the advancement of the

economy of Bali Province by the tourism

industry has not been able to overcome the

problem of unemployment in Bali Province.

Unemployment is an inexhaustible

problem and often occurs in developed and

developing countries and in every region.

The unemployment rate is one of the

indicators used to measure economic

progress in the area, where if the

unemployment rate is high then the

economy in the area is bad, and vice versa

if the unemployment rate in the area is low

then the economy is good. And if the

unemployment rate in the area is high, it is

also a factor hindering long term

development for the area.

A. W. Philips has observed a link

between inflation and unemployment

based on the incidence of economic

depression in America in 1992. From his

observations, there is a relationship

between inflation and unemployment,

where if inflation is high, unemployment

will be low.

Yacoub (2012) efforts to reduce the

unemployment rate and the poverty rate

are equally important. Because in theory, if

people are not unemployed, it means

having a job and income. With this income,

it is hoped that it can meet the needs of life,

if the needs of life are met, it can help

reduce poverty. So it can be said that with

a low unemployment rate, the poverty rate

is also low.

According to Elfindri (2001: 239)

another factor that also influences the

unemployment rate is the level of

education. The relationship between the

level of education and the unemployment

rate is that the level of education can

determine the employment status of a

person, because, with a better level of

education, a person will tend to get a more

qualified job so that they can meet the

needs of life and on the other hand can also

reduce the unemployment rate. In addition,

if someone is highly educated, then the

unemployment situation will not be as

severe as when compared to people who

are poorly educated and they are also able

to earn wages that range from the

minimum wage limit.

With a high level of education, a

person is expected to increase their

chances of getting a job. Education that a

person completes will be expected to be

able to produce quality human resources,

based on human resource coaching is an

effort to enlarge a person's production

ability either in work or other activities that

can make it easier for that person to be

placed in the job. Efforts to foster human

resources as one of the efforts to create job

opportunities that can create more job

opportunities are expected to reduce the

unemployment rate (Yos Merizal, 2008).

Growth and economic development

are two very important terms when talking

about the concept of economic

development. Economic growth is an effort

546 | The Effect of Education Level, Economic Growth, Allocation of Government Expenditure, and

The Number of Poor People on Unemployment In Bali Province In 2017-2020

to shape the identity of a country from an

economic perspective. Berger Hazil

(1990:18).

Mulyadi (2003) argues that an

increasing population can result in a large

number of labor forces. This means the

bigger the more people are looking for

work or unemployed.

The unemployment rates is also due to

the high criteria expected by companies

that create jobs, many companies require a

Bachelor's degree or even a Master's

degree for applicants. Therefore,

unemployment is the responsibility of the

community, especially the government as

the hope of the process of improving

people's lives, to immediately find a way

out by formulating strategic and systematic

measures as a way to deal with the problem

of unemployment. "A person is seen as

unemployed if he is temporarily

unemployed, is looking for a job, or waiting

for time to start a new job" Mankiw (2000:

228).

According to Kurniawan (2013: 7). The

close relationship between economic

growth and unemployment is that the

increasing economic growth in a country

has an impact on the rapid flow of capital

entering the region and the country, thus

providing employment opportunities

marked by the number of new business

sectors, thereby reducing the number of

unemployed in the country and the country.

Unemployment usually occurs in the

younger generation who have just

completed middle and high education.

Those who have just completed their

education tend to try to find work in

modern sectors such as offices. So they are

willing to wait for some gunda to get the

job. It is also possible that they are looking

for work by migrating to cities, provinces,

or being bullied by more developed

industrial activities. And this is one of the

causes of the open unemployment rate is

quite high in the city or area. And

conversely, the open unemployment rate in

regions or in provinces where economic

activity still rests on the traditional sector,

the open unemployment rate is low,

especially if the level of education in that

area is still low (Kuncoro, 2003: Junaidi &

Zulfanetti, 2016).

According to Jhingan (2012) economic

factors include factors of land and natural

wealth, capital accumulation, organization,

technology and division of labor and scale

of production. Land and other natural

wealth are natural resources that are the

main factors influencing economic growth.

According to Todaro (2004), public

expenditure is an expenditure that

increases community capital in the form of

development, both physically and

nonphysically. Development expenditure is

an expenditure shown to finance

development programs so that the budget

can always be adjusted to the funds spent.

In macro analysis, the level of economic

growth achieved by a country is measured

by the development of real national income

achieved by a country (Sukirno, 2006).

A country's high unemployment rate

can be attributed to GDP growth within the

country or to a smaller scope called Gross

Regional Domestic Product (GRDP), which

means an increase in regional income.

Okun's law explains the negative

relationship between unemployment and

GRDP. Any increased unemployment is

often associated with declining economic

Nico Candra Pratama, Maulidyah Indira Hasmarini | 547

growth, hence the number of unemployed

will increase. And vice versa, if economic

growth increases, then the problem of

unemployment can be reduced.

THEORETICAL FOUNDATIONS

Unemployment

Unemployment is a problem that must

be experienced by countries, both

developing and developed countries and in

every region.

Indonesia itself is a country with one of

the largest populations in the world which

should be the driver of the economy, and

as a result of the large number of people in

a country or in an area, it also causes an

unemployment rate caused by several

factors, such as education, environment,

technology, and equality from the

government.

A larger population can get a large

number of jobs. This means that the bigger

the more people need jobs and also lead

toan unemployment rate. In the opinion of

Mulyadi (2003).

Level of education

The level of education also affects and

can reduce the unemployment rate, which

is where if the person is educated or has

skills then can find a job and get wages as

done, if it can be implemented then the

unemployment rate will decrease.

According to Simanjuntak (1998).

Higher education results in better work

productivity so that the impact will provide

a greater income. Because if the education

is low and does not have skills, the choice

of work to meet the needs of life becomes

limited so that the job chosen is also an

ordinary job that earns a low income.

Kuncoro in Subli (2005: 26) gives the

choice of people who work as farmers have

an income of 4.82%, people who work as

employees in the field of production and

services get an income of 7-9%, and people

who work as managers or entrepreneurs

have an income of 35%. And it can be

concluded from the study that jobs that

require higher education or skills have a

greater income.

Economic growth

Looking at the development of data on

the Gross Regional Domestic Product

(GRDP) of a region is one way to measure

economic growth. GRDP is the sum of the

value of economic output produced or

generated by all economic activities in a

certain area (Regency/City). In units of a

certain period on the prevailing price and

constant price.

Economic growth is the long term

capacity increase of the country concerned

to provide its population with various

economic goods. The increase in capacity is

made possible by the advancement and

adjustment of technology, and ideology to

various existing circumstances. Simon

Kuznetz.

According to Smith, the available

natural resources (SDA) are the most basic

container of community production

activities. The amount of natural resources

available (SDA) is the maximum limit for the

growth of an economy.

Allocation of Government Expenditure

The allocation of government

expenditures is government sector

expenditures that are allocated including

548 | The Effect of Education Level, Economic Growth, Allocation of Government Expenditure, and

The Number of Poor People on Unemployment In Bali Province In 2017-2020

the purchase of goods, services, and

subsidy payments and are based on data

sources from the Central Statistics Agency

(BPS) of regencies/cities in Bali Province in

2017-2020.

The free market system of full use of

labor is not always created so it is necessary

to make efforts and government policies to

create the use of labor and economic

growth (Sukirno, 2004: 7). One solution that

can be done is to carry out fiscal policy

through tax reductions and additional

government spending.

Number of Poor Population

Poverty can be interpreted as a

condition of inability of income to meet

basic needs so that the ability to survive is

lacking. The number of poor people

according to the Central Statics Agency

(BPS) is the number of people who are

below the poverty line. The data taken at

the Central Statistics Agency of Bali

Province for 2017-2020 is secondary data.

to measure poverty by using the concept of

the ability to meet basic needs (basic need

approach). With this approach, poverty is

seen as the inability from the economic side

to meet the basic needs of food and not

food as measured from the side of income.

So the poor are those who have an average

monthly per capita expenditure below the

poverty line. According to the Central

Statistics Agency (BPS).

According to Arsyad (2010) there is a

relationship between the unemployment

rate and the level of poverty. For people

who do not have a permanent job or only

work part time (part-time) are always in the

poor community. The more demanding job

seekers but the narrow job opportunities

will make the number of unemployed

worse which means that a high

unemployment rate can lead to low

incomes which further triggers poverty and

the number of poor people who arise due

to insufficiency of basic needs.

MATERIALS AND METHODS

A. Data and data sources

Data

The main data to be used is secondary

data sourced from the publication of data

published by the Central Statistics Agency

(BPS) Bali in the year between 2017-2020

1. Data Sources

Data sources will be obtained from

secondary data, namely publications from

the Central Statistics Agency of Bali

Province in 2017-2020.

2. Data Collection Methods

The data collection method that will be

carried out is through secondary data

stages and then data processing and

analysis are carried out through the EViews

10 computer program.

3. Operational Definition

The operational definition described

here is as follows:

a. Unemployment

A situation in which a person

belonging to the labor force who wants to

get a job but has not got or can get it, and

unemployment itself can occur due to

several things, one of which is because of

technology, technological advances

themselves make Some people replaced by

the technology. The unit of unemployment

data is %.

Nico Candra Pratama, Maulidyah Indira Hasmarini | 549

b. Education Level

The level of education is seen from the

number of people who have passed the

latest education of SMA / SMK and above

in bali province in 2017-2020, which is

measured in units of soul.

c. Economic Growth

Economic growth is a process by which

the production capacity of an economy

increases over time. The economic growth

data used in this study is the rate of

economic growth on the basis of constant

prices in 2000.

𝑮𝑹𝑶𝑾𝑻𝑯

𝒊𝒕

𝑮𝑫𝑷

𝒊𝒕

− 𝑮𝑫𝑷

𝒊𝒕−𝟏

× 100%

𝑮𝑫𝑷

𝒊𝒕−𝟏

The unit of economic growth data is %.

d. Allocation of Government

Expenditures

The allocation of government

spending is data used to determine the

magnitude of the effect of government

spending on the unemployment rate. In

units of billions of rupiah.

e. Number of Poor People

Poverty can be interpreted as a

condition of the inability of income to meet

basic needs so that the ability to survive is

lacking. The number of poor people

according to the Central Statistics Agency

(BPS) is the number of people who are

below the poverty line. And the data will be

taken at the Central Statistics Agency of Bali

Province in 2017-2020. The unit of the

number of poor people is %.

f. Models and analysis tools

1. Panel

According to the analysis method used

in this study is panel data regression which

is a combination of (Gaby Dainty Julliet

Roring1 A. G., 2020)time series data and

cross section. Time series data typically

includes a single object/individual, but

spans multiple periods (daily, monthly,

quarterly, or yearly). Cross data consists of

several or many objects, often referred to

respondents for example a certain area

with some type of data in a certain period

of time.

2. Fem

According to (Gaby Dainty Julliet

Roring1 A. G., 2020) the fixed effect model,

it is a technique of estimating panel data

using variables dummy to catch any

intercept differences. This understanding is

based on the difference in intercepts

between companies but the intercepts are

the same between times (time invariants).

The model also assumes that the regression

coefficient (slope) remains between

companies and between times.

3. Rem

According to the method of panel data

analysis with (Gaby Dainty Julliet Roring1 A.

G., 2020) a random effect model, it must

meet the requirements, namely. The

number of cross sections should be greater

than the number of research variables. The

equation of the random effect model

according to Gujarati (2012).

4. Chow

According to the Chow Test is a test

carried out to determine the right model

among the (Gaby Dainty Julliet Roring1 A.

G., 2020). Common Effect or Fixed Effect to

be used in estimating panel data. Note the

probability value for cross section F, if the

value > 0.05 then the selected model is

CEM, but if the cross section F probability

value < 0.05 then the selected model is FEM.

550 | The Effect of Education Level, Economic Growth, Allocation of Government Expenditure, and

The Number of Poor People on Unemployment In Bali Province In 2017-2020

5. Hausman

The Hausman Test is a test carried out to

determine the right model among the

(Gaby Dainty Julliet Roring1 A. G., 2020).

Fixed Effect or Random Effect to be used in

estimating panel data. If the Cross section

Random probability value > 0.05 then the

model used is REM, but if the Cross section

Random probability value < 0.05 then the

selected model is the FEM model.

Based on the results of the panel data

test that has been carried out, it is known

that uji Chow shows that the best method

is Fixed Effect rather than Common Effect.

So the next step to determine whether

Fixed Effect is better than Common Effect,

Hausman test is needed.

Hausman's test shows that the best

method is Random Effect rather than Fixed

Effect. So the next step to determine

whether Random Effect is better than

Common Effect, a Lagrange Multiplier test

is needed.

To estimate the direction and magnitude

of the influence of education levels,

economic growth, allocation of

government expenditures, and the number

of poor people on unemployed in Bali

province in 2017-2020.

The panel data regression analysis

resulting from the secondary data of the

Central Statistics Agency (BPS) of Bali

Province with an econometric model which

is a combination of equation models that

are modifications by Ma'ruf and Wihastuti

(2008), Baltaqi (2000) are as follows:

𝑈𝐸𝑀𝑃

𝑖𝑡

= 𝛽

+ 𝛽

EDU

+ β

PRTMB

+ β

PNGEL

+ 𝛽

𝑖𝑡

+ e

Where :

UEMP : Unemployment (%)

EDU : Level of Education (soul)

PRTMB : Economic Growth (%)

PNGEL : Government Expenditure Allocation (billion rupiah)

PO : Number of Poor People (%)

: Error Term (error factor)

0. : Constant

...

: Independent Variable Regression Coefficient

I : Regencies/Cities

t : T-th year

Nico Candra Pratama, Maulidyah Indira Hasmarini | 551

RESULTS AND DISCUSSION

After the first test, the chow test is as follows:

Table 1. uji chow

Effects Test

Statistic

D.F.

Prob.

Cross-section F

3.817453

(8,23)

0.0055

Cross-section Chi-square

30.417402

0.0002

From the results of this study, it shows

that probability F = 0.0055 < 0.01,

Probability chi-square = 0.0002 < 0.01, H0

= CEM, HA = FEM. Then the H0 kint was

rejected, so the model chosen was FEM.

Below shows the FEM test results as follows:

Table 2. Fixed effect model

Variable

Coefficient

Std. Error

t-Statistic

Prob.

1.709951

2.864242

0.597000

0.5563

EDU

2.76E-05

4.78E-05

0.578945

0.5683

PRTMB

-0.303478

0.030652

-9.900785

0.0000

PNGEL

3.05E-10

6.49E-10

0.469524

0.6431

AFTER

0.090735

0.470342

0.192912

0.8487

Based on the chow test, a prob value of

0.0055 was obtained. When compared to

the value of α (0.01) then H0 is rejected

because the prob value is < α. From the

results of the Chow test, the appropriate

model or selected model is a fixed effect

model.

Based on the data model above, it is

known that the coefficient value (C) is

1.709951, meaning that unemployment has

a positive and insignificant effect because

the probability is greater than alpha.

Invariab el education level the coefficient

value of 2.76E-05 has a positive and

insignificant effect because the probability

(0.5683) is greater than alpha. On Economic

growth the value of the coefficient of -

0.303478 has a negative and significant

effect because the probability of 0.0000 is

less than alpha. In government spending,

the coefficient value of 3.05E-10 has a

positive and insignificant effect because

the probability (0.6431) is greater than

alpha. In the number of poor people, the

coefficient value of 0.090735 has a positive

and insignificant effect because the

probability (0.8487) is greater than alpha.

Nico Candra Primary, Maulidyah Indira Hasmarini | 552

10.36418/jrssem.v2i04.308 https://jrssem.publikasiindonesia.id/index.php/jrssem

CONCLUSIONS

Based on the analysis that has been

carried out, it can be concluded as follows:

1. Judging from the Fixed Effect

Model test, the coefficient value (C)

is 1.709951 and the probability

value is greater than alpha. This

means that the unemployment rate

has a positive and insignificant

effect.

2. When the level of education rises

by one thousand people, the

impact of the increase is 2.76E-05

and has a positive effect on

unemployment.

3. In variable economic growth When

it falls by 1%, then the impact of the

decline is -0.303478 so it affects

negatively unemployment.

4. When the government's allocation

of expenditure falls by one mile,

the impact of the decrease by

3.05E-10 has a positive effect on

unemployment.

5. When the

number of poor people

is 1%, the impact of the decrease is

0.090735, which has a positive

effect on unemployment.

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The Number of Poor People on Unemployment In Bali Province In 2017-2020

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