The Influence of Inflation and Economic Growth onUnemployment Rates in Indonesia: 2001-2017 Periods

Abstract

Unemployment is one of the economic problems faced by every country not unless forIndonesia. Lackof income causes unemployment to reduce their consumptionexpenditure which causes a decrease in the level of prosperity and welfare. Prolongedunemployment can also have adverse psychological effects on the unemployed and theirfamilies. Unemployment rates that are too high can cause political and social securitychaos that disrupt economic growth and development. The purpose of this study is toanalyze the effects of inflation and economic growth on unemployment in Indonesia(period 2001-2017). The method is used the method of multiple linear regression(ordinary least squares) using time series data from 2001-2017. The software used toprocess data is the Eviews 6. The results of multiple linear regression analysis indicatethat inflation has a positive effect on the unemployment rate in Indonesia in the period2001-2017. In other words, if inflation rises in value, it will increase the amount of theunemployment rate. While economic growth has a negative effect on the unemploymentrate in Indonesia in the period 2001-2017. In other words, if economic growth rises invalue, it will reduce the unemployment rate.