Author: Kartini, Sat Yudha Dahana, Pudji Astuty and Herry Wira Wibawa

Abstract:One of the most important issues in the economy of a region/country is the problem of unemployment. Unemployment causes many problems in the economy and society. The problem of unemployment cannot be avoided by anyone, but to overcome the problem is to identify the causes that affect the unemployment rate itself. This research raises several issues that can affect the level of unemployment in the mainland of Sumatra. The issues raised are Population, Regional Original Income, Education, Regional Minimum Wage, and Human Development Index. The analysis technique used is a combination of cross-section and time series data. The results of the study show that the Fixed Effect Model (FEM) is the most appropriate panel data regression model looking at the factors that affect unemployment. The research findings state that partially all variables have a significant effect. Another thing that was found was that education, regional minimum wages, and local revenue at t-1 could reduce unemployment rates in eight provinces in Sumatra. The magnitude of the variation of all independent variables that can explain their effect on unemployment is 78,48% and the remaining 21,52% is influenced by other variables, not in the study.

Keywords: Unemployment, Total Population, Regional Original Income, Education, Regional Minimum Wage, Human Development Index, previous year’s Local Original Income, and Human Development Index of the previous year.