Volume 8, Issue 7, July 2023 International Journal of Innovative Science and Research Technology

ISSN No:-2456-2165

The Influence of Economic Growth, Education and

Inflation on the Unemployment Rate Makassar City
Tuti Adi Tama1, Anas Iswanto Anwar2, Hamrullah 3
Hasanuddin University, Faculty of Economics and Bussines, Makassar, Indonesia

Abstract:- Economic growth has a negative and Unemployment is a complex problem because it
insignificant effect on unemployment. From the affects other factors, as well as being influenced by other
results of multiple regression analysis where the factors. The problem of unemployment has always been a
regression coefficient is -0.213, it means that if topic of discussion in every region. High unemployment will
cause economic and social problems. Economic problems
there is an increase in economic growth of 1%, it
arising from high unemployment rates affect economic
will reduce the percentage of unemployed by 0.213 development and influence the measurement of economic
in Makassar City. Education (average length of success. In addition, unemployment is also a social problem
schooling) has a positive and insignificant effect on because it has an impact on workers who are unemployed
unemployment, meaning that the education because they have less income, the poverty rate increases,
variable does not have a large influence because the crime and socio- political problems also increase.
profitability value (0.153) is greater than the
significant level of 0.05. Inflation has a positive and This is because every year the population in Indonesia,
especially the city of Makassar, continues to increase which
insignificant effect on unemployment. Based on the
causes the workforce to also increase, but this is not
results of the t-test, inflation does not have a large matched by the availability of jobs. So, this is one of the
(not significant) effect on unemployment because reasons why the unemployment rate in Makassar has
the probability value (0.836) is greater than the fluctuated. In addition to the lack of availability of jobs, the
significant level of 0.05. competencies possessed by the workforce are not in
accordance with the labor market, skills or skills also affect
Keywords:- Economic Growth, Education, Inflation ; unemployment, and there is termination of employment
Unemployment Rate Makassar City. (PHK). Particularly in the last two years, currently many
companies have terminated their employment (PHK) due to
I. INTRODUCTION the impact of the Covid-19 pandemic outbreak which has
In the midst of the Covid-19 outbreak, or often called caused the company to experience large losses, so they have
the corona virus, is an infectious disease that has entered terminated employment (PHK) to minimize the loss.
Indonesia since March 2, 2020. This corona virus can be Various government efforts to overcome the
said to be a very dangerous virus because apart from unemployment problem that occurs, namely creating a Pre-
attacking humans, it also attacks the Indonesian economy, Employment Card Program. The pre-employment card
which has slumped. The Covid-19 outbreak, which spreads program is a business and job compensation development
so quickly through droplets from the nose or mouth of program for job applicants, workers exposed to termination
people who are exposed to the corona virus to other people, of employment and competency development for micro and
so that those who are exposed to these droplets will also be small businesses. Recipients of the pre-employment card
exposed to Covid-19. So, the government adopted a Stay at will benefit both in terms of knowledge and financially, they
Home policy, company employees were laid off, people are given incentives worth IDR 600,000 for 4 months, after
were prohibited from traveling if it was not too important, in completing the training they choose. Then, the government
order to reduce the spread of Covid because it not only had also provided assistance to small communities affected by
an impact on the economic sector, but also had an impact on Covid-19 in the form of direct cash assistance (BLT)
the tourism and trade sectors. The more people who are distributed by the Minister of Social Affairs. With this
exposed to the corona virus, it is possible that the program, the government hopes that the community can take
unemployment rate in Indonesia will increase, especially in advantage of this opportunity well and help develop the
the city of Makassar, South Sulawesi. competencies they have, so that they can create a small
business with use the incentives or assistance provided and
can help their economy, especially during this pandemic.

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ISSN No:-2456-2165
The following is an overview of the unemployment rate in Makassar City in 2011-2020.

Fig. 1: Unemployment Data Graph

Source: BPS, processed (2021)

Based on the graph above, it can be seen that there are also not good for the economy, because it will cause
fluctuations in the unemployment rate in Makassar City. In deflation.
2016 the unemployment rate experienced a significant
increase, where in 2015 the unemployment rate decreased by Unemployment occurs due to an imbalance between
12.02percent to 4.8 percent. the demand for labor and the supply of labor, causing a high
unemployment rate. This imbalance can be a supply that is
Education is expected to be able to produce quality greater than the demand for labor (there is an excss supply
and competent resources to get jobs in accordance with the of labor) and greater demand than supply of labor (excess
education that has been taken. Education contributes directly demand for labor). According to Lewis, the excessive supply
to national income growth by increasing skills and labor of labor does not cause problems for economic
productivity. Education is a vessel that functions to prepare development. On the contrary, to accumulate income seen
one of the inputs into the production process, namely labor from how many excess workers.
and will produce good output in order to work productively
because of its quality. Increasing the quality of workers Based on the researchers' initial observations regarding
reflected in educational attainment or average schooling the problem of unemployment that occurs in the regions,
(RLS), will have a positive impact on labor productivity. especially in Makassar City, it can be caused by several
Likewise efforts to improve skills and workforce training factors including Economic Growth, Education, and
also have an impact on increasing productivity. Inflation. This is considering that many residents in
Makassar City choose not to continue their education or in
A good level of education will also have a positive other words prefer to look for work rather than finish school.
effect on the unemployment rate. In line with what Jhon The large number of people who choose not to complete
Dewey said in Sutarman Tajo (2011) means that education their schooling makes the number of the workforce also
is a process in which basic training, both intellectually and bigger.
emotionally. And so is the opinion of G. Terry Page, J.B
Thomas and A.R Marshal (2010) who define education as a II. METHODS
process ofdeveloping skills and human behavior as a whole.
Human Capital theory according to Frank and Bemanke The type of data used in this study is time series data,
(2007) states that to influence human productivity requires a namely education data for 2011-2020, economic growth
combination of education, experience, training, skills, habits, data for 2011-2020, inflation data for 2011-2020. This
health and energy. research includes quantitative research using an economic
approach.
Inflation is a condition that occurs due to an imbalance
between the demand for goods and the availability of these Source of data used in this research is secondary data.
goods, meaning that the demand for goods is higher than the Secondary data is data that is not obtained indirectly, but
availability of these goods (Soesastro, 2005). Inflation through related agencies such as the Central Statistics
occurs when prices increase continuously and influence one Agency (BPS), and other sources.
another. High inflation provides benefits for people who Research variables are the characteristics of an object
have bank debt, on the other hand high inflation makes being studied or anything that determines the results of the
people less willing to save. And inflation that is too low is research. According to Karlinger (1978) variable as any

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Volume 8, Issue 7, July 2023 International Journal of Innovative Science and Research Technology
ISSN No:-2456-2165
concept that determines the meaning or value of something. accepted (no significance), meaning that the independent
The variables in this study are the open unemployment rate, variables together do not have a significant effect on the
education level, employment opportunities and economic dependent variable. Meanwhile, if Fcount > Ftable, then H0
growth in Makassar City. is rejected (significant), meaning that they both have an
effect on the dependent variable. The way to obtain the
The research design is a basic description of the Ftable value is:
research that will be carried out. According to Malhotra
(2007) research design is a framework used to carry out F (k;n-k) Information :
research. A good research design will produce effective and k = Number of Independent Variables n = Number of
efficient research. The description of the research is as Samples.
follows.
 T Test (Partial)
The data used in this research is secondary research T test is used to determine whether the independent
data taken from the Central Bureau of Statistics (BPS), variable has a significant effect on the dependent variable
namely education data for 2011-2020, economic growth and to make a decision whether the hypothesis is proven or
data for 2011- 2020, and inflation data for 2011-2020. In not. In making decisions, the partial hypothesis testing part
addition, collecting information through journals, books, the is based on the profitability value, namely if sig > 0.05 and
internet, and institutions or agencies related to this research. Tcount <Ttable then H0 is accepted, and if sig <0.05 and
Tcount > Ttable then H0 is rejected. As for how to obtain the
The data analysis design used in this study is a value of T table,namely: t(a/2; n-k-1)
multiple linear regression model to determine the effect of
economic growth (X1), education (X2), inflation (X3) and Information :
the open unemployment rate (Y). The form of the equation a : Constant/significant level n : Number of samples k :
is as follows: Number of independent variables.

Y=β0+β1X1+β2X2+β3K+e (3.1) B. Classical Assumption Test

Information :  Multicollinearity Test

Y = Unemployment Rate X1 = Economic Growth X2 The multicollinearity test has a correlation between the
= Education explanatory variables in the regression model. According to
X3 = Inflation β0 = Constant Ghozali (2016) the multicollinearity test aims to see whether
β1, β2, β3 = Regression Coefficient e = error term the regression model finds a relationship between the
independent variables and the dependent variable. To
A. Statistical Test determine whether there is a correlation or there is no
correlation, that is seen from the tolerance value and the
 Determinant Coefficient Analysis (R2) variance inflation factor (VIF) value. VIF > 10 results in
According to Gujarati (2004) the coefficient of multicollinearity.
determination is to find out how much the percentage
contribution of the independent variable can be explained in  Autocorrelation Test
the percentage dependent variable. The R Square value is According to Ghozali (2016) Autocorrelation arises
said to be good if it is above 0.5 because the R square value because sequential observations over time are related to
ranges from 0 to 1. The R-Square value always increases one another. To find out whether or not there is
with the addition of the independent variables of a model autocorrelation is to do the Durbin Watson (DW) test,
and becomes a weakness of R2. So to overcome this, Lagrange Multiplier (LM), Breusch Godfrey (BG) method,
adjusted R2 is used (adjusted R2) to avoid bias towards the and run tests (Rahim, 2012). The Durbin Watson test is one
independent variables included in the model. According to of the popular tests. The formula used for the Durbin
Rahum (2013) it is formulated as follows: Watson test is:

Adjusted R2=1-(1-R2)(𝑛−1) (𝑘−1)… (3.2) DW = ∑(𝑒−𝑒𝑡−1)2

∑𝑒2
Where : 𝑡
Adjusted
R2 : Adjusted Determination Coefficient Information:
K : Number of Variables not including the intercept DW: Durbin Watson Test Value E : Residual ValueEt-
N : Number of Samples. 1 : Residual value of a previous period

 F Test (Simultaneous) As for how to detect autocorrelation with Test Durbin

The significance test was carried out with the aim of Watson, namely:
statistically proving that the independent variables, namely
economic growth (X1), education (X2), inflation (X3), Positive Autocorrelation Detection
have an effect on the dependent variable, namely the open If d < dL then there is a positive autocorrelation If d >
unemployment rate (Y). In making decisions based on the du then there is no positive autocorrelation
value of profitability, that is, if Fcount <Ftable then H0 is

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If dL < d < dU or 4-dU <4-dl then the test has no Astronomically, the city of Makassar is located between
definite conclusion 119˚24`17`38” East Longitude and 5˚8`6`19” South
Latitude. With an area of 175.77 square kilometers,
Negative Autocorrelation Detection Makassar city is recorded and has 15 sub-districts, namely
Mariso, Mamajang, Tamalate, Rappocini, Makassar, Ujung
If (4-d) < dl then there is a negative autocorrelation If Pandang, Wajo, Bontoala, Ujung Tanah, Kep. Sangkarang,
(4-d) > du then there is no negative autocorrelation Talllo, Panakukang, Manggala, Biringkanaya. and
If dl (4-d) < du then the test has no definite conclusion Tamalanrea. And the boundaries of the city of Makassar as
Information: follows:
 To the north it is bordered by Maros district
d: Durbin Watson value dL : Lower limit of DW  To the south it is bordered by Gowa district
dU : Upper limit of DW.  Next to the Makassar Strait district
 To the east it is bordered by Maros district
 Heteroscedasticity Test
The heteroscedasticity test is used to determine whether Makassar City plays a role as a trade and service
there is inequality of residual variance for observations in center, industrial activity center, government activity center,
the linear regression model. Heteroscedasticity is a situation goods transportation service node, education and health
where the error variance of all observations of each service center. The city of Makassar has a strategic position
independent variable in the regression model is not the because it is located at the intersection of the southern and
same. The method of detecting heteroscedasticity is the northern traffic unions in South Sulawesi Province, from the
graphical method and the park test. In detecting western region to the eastern region of Indonesia and from
heteroscedasticity with the Glesjer test, it can be seen the northern region to the southern region of Indonesia.
through the significance value between the independent Makassar City is a lowland city that has a height that varies
variables with an absolute residual of more than 0.05, so from 1-25 meters above sea level. Administratively, the city
there is no problem. Meanwhile, the test looks at the graph of Makassar has 15 districts.
for how to detect it, namely if there is a regular pattern
(wavy, widens and then narrows), then heteroscedasticity IV. DISCUSSION
occurs. One good regression model is homoscedasticity or
there is no heteroscedasticity problem. In this study using multiple linear regression analysis
to determine the effect of economic growth, education and
III. RESULT inflation on the unemployment rate in the city of Makassar.
The analytical tool used in this study was the SPPS statistic
This research was carried out in the city of Makassar 25. The types of tests carried out were T test, F test,
which is the capital city of South Sulawesi province and the determinant coefficient (R2), autocorrelation test,
largest city in Eastern Indonesia and is nicknamed the multicollinearity test andheteroscedasticity test.
Metropolitan City. Administratively, the city of Makassar
consists of 15 sub- districts and 153 sub-districts.

Variabel Independen T.H. Β thitung Sig. VIF

PE - -0.213 ns -0.558 0.558 1.352
PD - 0.472ns 1.1537 0.153 1.163
IF - 0.111ns 0.212 0.836 1.198
Intersep 652.984
Adjusted R2 0.052
Fhitung 1.257
DW 2.567
N 15
Source: Data Processing Results, 2022Information:
ns : Not Significant T.H: A Sign of Hope

A. Multiple Linear Regression Analysis Interpretation of the coefficients of the multiple linear
Multiple linear regression analysis aims to determine the regression equation, namely:
effect of the independent variables (economic growth,  The Constant value is 652,984 which means that if the
education, and inflation) on the dependent variable other independent variables are zero, then the
(unemployment rate) in the city of Makassar. Based on the unemployment variable increases by 652,984%.
analytical method used and explained in the previous  The coefficient value of the X1 variable (Economic
chapter, the following equation is obtained: Growth) is -0.213% which is negative, meaning that
every 1% increase in economic growth will reduce
Y= 652.984 -0.213 + 0.472 + 0.111 + e unemployment in Makassar City by -0.213%. The
relationship between economic growth and
unemployment is negative (-), where a decrease or

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increase in economic growth will affect unemployment. C. Classical Assumption Test
 The coefficient value of the variable X2 (Education) is
0.472% which is positive, meaning that if there is an  Multicollinearity Test
increase of 1% in education, unemployment will increase According to Ghozali (2016) the multicollinearity test
by 0.472%. There is a positive relationship between aims to see whether the regression model finds a
education and unemployment. relationship between the independent variables and the
 The value of the coefficient variable X3 (inflation) of dependent variable. To determine whether there is a
0.111% is positive, meaning that for every 1% correlation or there is no correlation, that is seen from the
increase in inflation, unemployment will increase by tolerance value and the variance inflation factor (VIF) value.
0.111%. There is a positive relationship between VIF > 10 results in multicollinearity.
inflation and unemployment.
Based on table 4.9 above, it can be seen that the VIF
B. Statistical Test for each variable is as follows:
 The VIF value for the economic growth variable (X1) is
 Determinant Coefficient Test (R2) 1.352 <10 and the tolerance value is 0.740 <10, so that the
The determinant coefficient (R2) is to find out how much economic growth variable is stated that there is no
the independent variable contributes to the dependent multicollinearity.
variable. The value between 0-1 where the value is close to  The VIF value for the Education variable (X2) is 1.163
the value 1 means the higher the contribution of the <10, and the tolerance value is 0.860 <10, so that the
independent variable to the dependent variable. Based on inflation Education variable is stated that there is no
Table 4.2 above, it can be seen that the coefficient of multicollinearity.
determination is at Adjust R Square of 0.052. This shows  The VIF value for the Inflation variable (X3) is 1.198 <
that the variables X1 (Economic Growth), X2 (Education), 10, and the tolerance value is 0.835 < 10, so that the
and X3 (Inflation) affect the variable Y (Unemployment) in inflation variable is stated that there is no
Makassar City by 0.52 %. The rest is influenced by multicollinearity.
variables outside the research of 99.48%.
 Autocorrelation Test
 T Test (Partial) The autocorrelation test is a regression model test to
The T test aims to determine whether there is a partial determine whether there is a correlation of confounding
effect (itself) provided by the independent variable of the errors in a certain period and the following period. If there is
dependent variable. The t test is used to make a decision a correlation, then there is an autocorrelation problem. Based
whether the hypothesis is proven or not, where the on table 4.2 above, the autocorrelation test results for the
significant level used is 5%. The basis for making a decision Durbin- Watson value are 2.567, the significance table value
if it has a significant effect on the test results shows a sig is 5% with (n=15) and the number of independent variables
value <0.05 and t count > t table. The t table is 1.796. The (K=3) yields a dL value of 0.8140, a dU value of 1.7501.
results of the t test show that the variable Economic Growth, Because the DW value is greater than du=2.567>1.7501. So
the significance value (0.588) is smaller than the significant it can be concluded that there is no autocorrelation between
level of 0.05 indicates that economic growth has a negative all independent (X) and dependent (Y) variables.
and insignificant effect on unemployment. Education
variable, its significant value (0.153) is greater than the  Heteroscedasticity Test
significant level of 0.05 so, it can be concluded that The heteroscedasticity test is a regression model test
education (average length of schooling) has a positive and tool to determine the similarity of the variance of the
insignificant effect on unemployment. Inflation variable, the residuals one more observation. A good regression model is
significant value (0.836) is greater than the significant level homoscedasticity or heteroscedasticity does not occur. The
of 0.05 indicating that inflation has a positive and method of detecting heteroscedasticity is the graphical
insignificant effect on unemployment. method and the park test. Based on table 4.1, it can be seen
that there is no specific pattern because the points spread
 F Test (Simultaneous) irregularly above and below the 0 axis on the y axis. So it
The F test aims to determine whether there is a can be concluded that there is no heteroscedasticity.
simultaneous effect (together) given the independent
variable on the dependent variable. Based on table 4.2 V. CONCLUSION
above, it indicates the influence of the variables Economic
Growth (X1), Education (X2) and Inflation (X3) on Based on the data processed and analyzed, it can
Unemployment (Y) with an Fcount of 1,257 and a Ftable of be concluded:
3,885. The value of Fcount (1.257) < Ftable (3.885)  Effect of Economic Growth (X1) on Unemployment.
indicates that together the variables of economic growth Economic growth has a negative andinsignificant effect on
(X1), Education (X2), and inflation (X3) are not significant unemployment. From the results of multiple regression
to the unemployment variable(Y). analysis where the regression coefficient is -0.213, it
means that if there is an increase in economic growth of
1%, it will reduce the percentage of unemployed by 0.213
in Makassar City. Increased economic growth, production
of goods and services will also increase. With the increase

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in the production of these goods and services, there will significant relationship.
automatically be an increase in thefactors of production so
that more labor is needed. With the demand for labor, this The results of this study indicate that economic growth
will reduce the unemployment rate. And conversely, if in the city of Makassar is not a quality economic growth.
there is a decrease in the factors of production, it will Quality economic growth can be seen through the welfare of
increase unemployment the community in the city community and how to absorb
 The Effect of Education (Average Length of School) labor. And what is currently happening in the city of
on Unemployment. Education (average length of Makassar, there are still many people who do not have jobs
schooling) has a positive and insignificant effect on and lack of social welfare (such as many homeless people
unemployment, meaning that the education variable does and buskers). The most important thing to be developed in
not have a large influence because the profitability value advancing economic growth is to encourage the
(0.153) is greater than the significant level of 0.05. manufacturing industry sector, water supply, construction,
Because it can be seen that although education (average car and motorbike repair, accommodation and food and
length of schooling) increases, Unemployment has also drink provision, information and communication, financial
increased, this can be proven in education data (average services, real estate, corporate services, educational services,
length of schooling) and unemployment in Makassar City educational services. Health & social activities and other
in 2020 education (average length of schooling) has services in the city of Makassar. That way, economic growth
increased by 11.21% and unemployment has increased by increases and the problem of unemployment can also be
15.92%. resolved.

This research is in line with previous research  Effect of Inflation on Unemployment. Inflation has a
conducted by Syamsu Nujum, Zainuddin Rahman, & Ratu positive and insignificant effect on unemployment. Based
Purnama (2020) that the level of education has an effect and on the results of the t-test, inflation does not have a large
is not significant on the unemployment rate. However, this (not significant) effect on unemployment because the
research is not in line with the research conducted by probability value (0.836) is greater than the significant
Imarotus Suaidah and Hendry Cahyono that the level of level of 0.05. It can be seen that inflation increases, then
education has a significant effect on the unemployment rate. unemployment also increases. This research is in line
The results of this study are also not in line with the theory with previous research conducted by Rika Amelia (2017)
of human capital. The longer a person takes education, the and Farid Alghofari (2010) that inflation has no
skills and knowledge they have also increase and they have significant effect on unemployment. However, this
a great chance to get a good job and a big salary. research is not in line with what was done by Muhammad
Ashar (2020) that inflation has a significant effect on
The theory of human capital explains that education unemployment. The results of this study are not in line
has a positive effect on economic growth. That is, when with the Philips Curve theory that inflation has a negative
education increases, economic growth increases. If growth relationship to unemployment. A.W Philips describes the
increases, the unemployment rate will automaticallydecrease fact that inflation is a reflection of total aggregate
because economic growth has a negative effect on the level demand. If aggregate demand increases, the price of a
of education. So it can be said that education has a negative product also increases. With high prices, the desire for
effect on unemployment. production also increases, thereby reducing the
unemployment rate. However, this research is not in line
Based on the theory of human capital which states that with what was conducted by Muhammad Ashar (2020)
people who have higher education, as measured by length of that inflation has a significant effect on unemployment.
schooling, will have job opportunities and good salaries
compared to those with lower levels of education. However, Inflation is a general increase in prices for goods,
what is happening now is that many people who have a services and factors of production. Inflation is a reflection of
higher level of education do not have jobs, compared to aggregate demand. In accordance with the demand theory
those who do lower education. This happens because people that if demand increases, the price also increases. If there is
who have low education have more experience and choose an increase in the prices of a commodity, both goods and
to become farmers, laborers, company employees. services, it will take a lot of manpower to fulfill the demand,
Meanwhile, those with higher education have minimal so that the demand for goods and services by consumers
experience because they are more concerned with mastering can be overcome and likewise the unemployment rate will
theory. As well as the lack of desire to work that is not in also decrease. The results of this study indicate that if
accordance with his passion. Based on the results of the inflation in the city of Makassar increases, the
regression analysis, it shows that education (average length unemployment rate will also increase. So that it is necessary
of schooling) has a positive effect on unemployment, to control inflation, to overcome inflation requires
meaning that if education increases, unemployment also cooperation between the government, the business world
increases. output in the business cycle. O'kun's law also and the general public because the factors that cause
stores the relationship between output and labor markets inflation are from the demand, supply and expectation sides.
which describes the combination of short movements of real Inflation control is also carried out by setting maximum
GDP and changes in the unemployment rate. However, this prices, stabilizing people's incomes, and increasing
research is not in line with research conducted by Rika production output.
Amelia (2017) that economic growth has a negative and

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