DYNAMICS OF LABOR ABSORPTION FACTORS IN CENTRAL JAVA

Abstract

Regional economic growth is reflected in its ability to optimally absorb labor. Central Java, as a province with a large population, faces various dynamics in the labor absorption process. This study aims to analyze the effect of household consumption, human development index (HDI), population, and investment on labor absorption in Central Java Province in the period 2022–2024. This study uses a quantitative approach and the method used is panel data regression. The data used is a combination of time series and cross-section data for the period 2022-2024 obtained from the Central Statistics Agency. Based on the test results, the Fixed Effect Model (FEM) approach model is the most appropriate model to use in this study. The results of the study show that partially the human development index (HDI) and population variables have a significant effect on labor absorption, while the household consumption and investment variables do not have a significant effect. However, simultaneously all variables have a significant effect on labor absorption in both the formal and informal sectors. Therefore, local governments need to continue to encourage economic policies that support the increase in both variables in order to create an inclusive and competitive labor market.