Technological Changes, Investments, and Unemployment in Indonesia


The vicious circle of poverty in a country could stop if the government was able to solve the problem of unemployment. One way to reduce unemployment is to boost investment. In addition, in the era of the industrial revolution the role of technological development also needs to be considered as a means of reducing unemployment. This study is aiming to analyze the effect of physical investment, educational investment, and technological changes on unemployment in Indonesia. The data used in this study are obtained from Indonesian Central Statistics Agency (BPS). The technological development is proxied by Index of Technology and Communication. The regression method is used to reach the aim of the study. The result of the analysis indicates that the physical investment and technological development have a negative and significant effect on unemployment. Moreover, the findings suggest that the reduction in unemployment in Indonesia is caused by many people who become online motorcycle taxi drivers in the informal sector.

Keywords: technology development, physical investment, educational investment, unemployment, panel data

[1] Brynjolfsson, E. and McAfee, A. (2011). Race Against the Machine: How the Digital Revolution is Accelerating Innovation, Driving Productivity, and Irreversibly Transforming Employment and the Economy. Brynjolfsson.

[2] Paramita, A. I. D. and Purbadharmaja, I. P. (2015). Pengaruh Investasi dan Pengangguran terhadap Pertumbuhan Ekonomi serta Kemiskinan di Provinsi Bali. E-Jurnal Ekonomi Pembangunan Universitas Udayana, vol. 4, issue 10.

[3] Jonnadi, A., Amar, S. and Aimon, H. (2012). Analisis pertumbuhan ekonomi dan kemiskinan di Indonesia. Jurnal Kajian Ekonomi, vol. 1, issue 1.

[4] Asrol, A. and Ahmad, H. (2018). Analysis of Factors that Affect Poverty in Indonesia. Analysis, vol. 39, issue 45, pp. 14.

[5] Mekahsari, I. (2012). Pengaruh Investasi Melalui Pertumbuhan Ekonomi Terhadap Kemiskinan di Sulawesi Selatan. In Skripsi tidak diterbitkan. Makassar: Fakultas Ekonomi dan Bisnis, Universitas Hasanuddin Makassar.

[6] Delis, A., Mustika, C. and Umiyati, E. (2015). Pengaruh Fdi terhadap Kemiskinan dan Pengangguran di Indonesia 1993-2013. Jurnal Paradigma Ekonomika, vol. 10, issue 1, pp. 231-245.

[7] Kristyanto, V. S. and Wahyudi, T. (2017, October). Human Capital Investment and Its Role in Encouraging Inclusivity in East Java. In Mulawarman International Conference on Economics and Business (MICEB 2017). Atlantis Press.

[8] Wahyuni, I. G. A. P., Sukarsa, M. and Yuliarmi, N. (2014). Pengaruh Pengeluaran Pemerintah dan Investasi terhadap Pertumbuhan Ekonomi dan Kesenjangan Pendapatan Kabupaten/Kota di Provinsi Bali. EJurnal Ekonomi dan Bisnis Universitas Udayana.

[9] Syera, I. A. (2017). The Effect of Unemployment Rate, Human Development Index, Gross Domestic Product against Level of Poverty in Indonesia. Proceedings of AICS-Social Sciences, vol. 7, pp. 62-68.

[10] Goos, M. (2018). The Impact of Technological Progress on Labour Markets: Policy Challenges. Oxford Review of Economic Policy, vol. 34, issue 3, pp. 362-375.

[11] Song, L. and Van Geenhuizen, M. (2014). Port Infrastructure Investment and Regional Economic Growth in China: Panel Evidence in Port Regions and Provinces. Transport Policy, vol. 36, pp. 173-183.

[12] Ekpung, E. G. (2014). Public Infrastructure Spending and Economic Growth in Nigeria: An Error Correction Mechanism (ECM) approach. Journal of Social Economics Research, vol. 1, issue 7, pp. 129-140.

[13] Kumo, W. L. (2012). Infrastructure Investment and Economic Growth in South Africa: A Granger Causality Analysis. African development Bank Group Working Paper Series, issue 160.

[14] Pradhan, R. P. and Bagchi, T. P. (2013). Effect of Transportation Infrastructure on Economic Growth in India: the VECM Approach. Research in Transportation Economics, vol. 38, issue 1, pp. 139-148.

[15] Manyika, J. and Roxburgh, C. (2011). The Great Transformer: The Impact of the Internet on Economic Growth and Prosperity. McKinsey Global Institute, vol. 1.

[16] Bertschek, I., et al. (2015). The Economic Impacts of Broadband Internet: A Survey. Review of Network Economics, vol. 14, issue 4, pp. 201-227.

[17] Eita, J. H. and Ashipala, J. M. (2010). Determinants of Unemployment in Namibia. International Journal of Business and Management, vol. 5, issue 10, pp. 92.

[18] Riddell, W. C. and Song, X. (2011). The Impact of Education on Unemployment Incidence and ReEmployment Success: Evidence from the US Labour Market. Labour Economics, vol. 18, issue 4, pp. 453-463.

[19] McClure, P. K. (2018). “You’re fired,” Says the Robot: The Rise of Automation in the Workplace, Technophobes, and Fears of Unemployment. Social Science Computer Review, vol. 36, issue 2, pp. 139-156.

[20] Kaur, K. (2014). An Empirical Study of Inflation, Unemployment, Exchange Rate and Growth in India. Asian Journal of Multidisciplinary Studies, vol. 2, issue 10, pp. 20.

[21] Deliarnov. (2005). Perkembangan Pemikiran Ekonomi. Jakarta: PT Raja Grafindo Persada.

[22] (2019, October). Retrieved from.