Promote inclusive economic growth

Oct 13, 2025 by talynt.org 124 views

Analysis of the Influence of Population, Unemployment Rate, and Economic Growth on Poverty Levels in Indonesia

Introduction

Poverty remains a significant challenge in Indonesia, with millions of people living below the poverty line. Understanding the factors that contribute to poverty is crucial in developing effective policies to address this issue. This analysis examines the influence of population, unemployment rate, and economic growth on poverty levels in Indonesia. We utilized a 30-year time series data from the Central Statistics Agency (BPS) and applied multiple regression analysis using the EViews application.

The Effect of Population on Poverty Level

Research has shown that the population in Indonesia has a positive effect on poverty. As the population increases, so does the poverty level. This can be attributed to the fact that an increase in population is often not balanced with the availability of adequate employment. The limitations of resources and public facilities make it difficult for residents to gain proper access to education, health, and work, all of which contribute to poverty. For instance, in Indonesia, the population has been growing at an average rate of 1.2% per annum, while the number of jobs created has not kept pace with this growth. As a result, many people are left without employment, leading to poverty.

The Effect of Unemployment Level

The unemployment rate in Indonesia also shows a significant positive effect on poverty. When the unemployment rate increases, more individuals do not have a fixed income, causing economic instability for their families. The high unemployment rate in Indonesia is often caused by a mismatch between labor qualifications and industrial needs. This creates challenges for job seekers to obtain jobs that are in accordance with their expertise, resulting in an increase in the number of people who live in poverty. For example, in 2020, the unemployment rate in Indonesia was 5.1%, with the majority of the unemployed being young people with limited skills and education.

Economic Growth as a Pressure Factor

Conversely, economic growth has a negative influence on the level of poverty. Positive economic growth usually shows that there is an increase in productivity, job creation, and increasing community income. When the economy grows, usually more individuals get jobs, and income per capita increases, which in turn can reduce poverty. However, it is essential to note that economic growth must be inclusive, where all levels of society can feel the benefits. For instance, in Indonesia, the economic growth rate has been increasing steadily over the past decade, from 4.5% in 2010 to 5.2% in 2020. This growth has created more jobs and increased income for many people, leading to a reduction in poverty.

The Relationship Between Population, Unemployment, and Economic Growth

The results of this analysis show that the population and unemployment rate have a significant positive influence on the poverty rate in Indonesia, while economic growth has a negative and significant influence on poverty. This suggests that policies aimed at reducing poverty should focus on creating more jobs, improving the quality of education, and promoting inclusive economic growth. By doing so, Indonesia can overcome the challenges of poverty and achieve sustainable development.

Conclusion

In conclusion, this analysis has shown that the population and unemployment rate have a significant influence on the poverty rate in Indonesia. With the increasing population, it is essential for the government to create more jobs and improve the quality of education so that people can compete in the world of work. In addition, policies that encourage inclusive and sustainable economic growth will be vital to reduce the level of poverty in this country. With a focus on the development of human resources and the creation of economic opportunities, Indonesia can overcome the challenges of poverty that still exist.

Recommendations

Based on the findings of this analysis, the following recommendations are made:

Create more jobs: The government should create more jobs, particularly in the informal sector, to absorb the increasing population and reduce unemployment.
Improve education: The quality of education should be improved to equip people with the necessary skills and knowledge to compete in the world of work.
Promote inclusive economic growth: Economic growth should be inclusive, where all levels of society can feel the benefits. This can be achieved by promoting entrepreneurship, innovation, and small and medium-sized enterprises (SMEs).
Invest in human resources: The government should invest in human resources development, including education, training, and healthcare, to improve the productivity and competitiveness of the workforce.
Reduce income inequality: Income inequality should be reduced by promoting fair and equitable distribution of wealth and income.

By implementing these recommendations, Indonesia can overcome the challenges of poverty and achieve sustainable development.
Frequently Asked Questions (FAQs) on the Analysis of the Influence of Population, Unemployment Rate, and Economic Growth on Poverty Levels in Indonesia

Q: What is the main objective of this analysis?

A: The main objective of this analysis is to examine the influence of population, unemployment rate, and economic growth on poverty levels in Indonesia.

Q: What data was used for this analysis?

A: This analysis utilized a 30-year time series data from the Central Statistics Agency (BPS) of Indonesia.

Q: What is the significance of the population in Indonesia on poverty levels?

A: The population in Indonesia has a positive effect on poverty levels. As the population increases, so does the poverty level. This is due to the fact that an increase in population is often not balanced with the availability of adequate employment.

Q: What is the relationship between unemployment rate and poverty levels in Indonesia?

A: The unemployment rate in Indonesia has a significant positive effect on poverty levels. When the unemployment rate increases, more individuals do not have a fixed income, causing economic instability for their families.

Q: How does economic growth affect poverty levels in Indonesia?

A: Economic growth has a negative influence on poverty levels in Indonesia. Positive economic growth usually shows that there is an increase in productivity, job creation, and increasing community income, which can reduce poverty.

Q: What are the implications of this analysis for policymakers in Indonesia?

A: The findings of this analysis have significant implications for policymakers in Indonesia. They should focus on creating more jobs, improving the quality of education, and promoting inclusive economic growth to reduce poverty levels.

Q: What are the recommendations for reducing poverty levels in Indonesia?

A: Based on the findings of this analysis, the following recommendations are made:

Create more jobs: The government should create more jobs, particularly in the informal sector, to absorb the increasing population and reduce unemployment.
Improve education: The quality of education should be improved to equip people with the necessary skills and knowledge to compete in the world of work.
Promote inclusive economic growth: Economic growth should be inclusive, where all levels of society can feel the benefits. This can be achieved by promoting entrepreneurship, innovation, and small and medium-sized enterprises (SMEs).
Invest in human resources: The government should invest in human resources development, including education, training, and healthcare, to improve the productivity and competitiveness of the workforce.
Reduce income inequality: Income inequality should be reduced by promoting fair and equitable distribution of wealth and income.

Q: What are the limitations of this analysis?

A: This analysis has several limitations, including:

Data limitations: The data used for this analysis is limited to 30 years, which may not capture the full range of factors influencing poverty levels in Indonesia.
Methodological limitations: The analysis used a single econometric model, which may not capture the complexity of the relationships between population, unemployment rate, and economic growth.
Theoretical limitations: The analysis is based on a simplified theoretical framework, which may not capture the nuances of the relationships between population, unemployment rate, and economic growth.

Q: What are the future research directions for this topic?

A: Future research directions for this topic include:

Using more advanced econometric models: Future research should use more advanced econometric models, such as vector autoregression (VAR) or structural vector autoregression (SVAR), to capture the complexity of the relationships between population, unemployment rate, and economic growth.
Including additional variables: Future research should include additional variables, such as government spending, trade policies, and institutional factors, to capture the full range of factors influencing poverty levels in Indonesia.
Using alternative data sources: Future research should use alternative data sources, such as household surveys or administrative data, to capture the nuances of the relationships between population, unemployment rate, and economic growth.