A Dynamic Panel Model to Identify Factors Affecting the Labor Force Participation Rate in Districts/Municipalities of West Kalimantan Province in 2018-2023

Abstrak

One metric used to determine the percentage of the labor force in a population is the Labor Force Participation Rate (LFPR). The degree of economic activity engagement among working-age individuals, including those who are employed and those seeking employment, is depicted in this figure. A wide range of factors, including government policies across several sectors, education, and economic conditions, influence LFPR. This study aims to investigate the effects of a number of factors, including the Total Population, the Human Development (HDI), and the Regency/City Minimum Wage (MSW), on the Labor Force Participation Rate (LFPR), specifically in the regency/city of Kalimantan Barat Province between 2018 and 2023. The Generalized Method of Moment Arellano-Bond is the methodology employed in this research. The GMM Arellano-Bond Method was selected due to its capacity to resolve endogeneity issues. According to the estimation results, the Labor Force Participation Rate (LFPR) is significantly impacted by the Human Development Index (HDI), while Total Population, or Minimum Wage have no significant on LFPR. Kalimantan Barat has a diverse proportion of working-age population so that it does not describe all individuals in the population who are classified as working age willing to enter the labor market, and the minimum wage also has no effect on LFPR because Kalimantan Barat has an economy that is still dominated by the informal sector such as agriculture, where informal workers are not bound by wage regulations.