STRUCTURAL CHANGE, ECONOMIC GROWTH, AND EMPLOYMENT OPPORTUNITIES IN INDONESIA; A Simultaneous Approach
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Date
2020
Journal Title
Journal ISSN
Volume Title
Publisher
International Journal of Psychosocial Rehabilitation, Vol.24, Issue 02
Abstract
The purpose of this study is toanalyze the relationship between structural change, economic
growth and employment in Indonesia.The analytical method use dissimultaneous regression model consisting of 3
(three) equations where economic growth, structural change and employment is treated as endogenous variables,
and include three (3) exogenous variables namely investment, wage and education. From the identification test is
known thatequation of employment is exactly Identified then estimated using indirect leastsquare (ILS) method,
while 2 other sareover-Identified equation then estimated using a two stage leastsquare (TSLS) method.
The results showed that : 1) Economic growth is positively and significantly influenced by employment
and investment, 2) Employment are positively and significantly influenced by economic growth and structural
change, while the wage rate has a negative effect; 3) structural change positively and significantly influenced by
economic growth and the advancement of education.
Important recommendations of these findings are : 1) expansion of employment should be more focused on
efforts to encourage productive investments with labor-intensive technologies, 2) increased investments must be
accompanied by improvement of the level of educationand improving the quality of labor, 3) the process of
structural change must be maintained in the direction of employment transformation through the development of
labor-intensive industrial and service sectors.
Description
Keywords
Economic Growth, Structural Change, Employment