Analysis of Human Capital on Economic Growth and Labor Demand in Indonesia

Authors(3) :-Is Sugiyanti, Bambang Juanda, Tony Irawan

The effect of human capital on economic growth has been an issue since the existence of endogenous growth theories that include human capital as a factor of production. Likewise with the influence of human capital on labor demand. Different results from the theory are sometimes found, especially in the case of developing countries. Research that using workers' variables by calculating the underemployment rate is still rarely conducted in Indonesia. This study uses labor data in Indonesia at the provincial level from 1996 to 2018. The labor variable used takes into account open unemployment and underemployment rates. Educational variables are used to proxy human capital. Using the simultaneous equation model, we find a significant relationship between human capital factors on economic growth and labor demand. The higher the education level of the workforce, the greater the influence donated on economic growth.

Authors and Affiliations

Is Sugiyanti
Department of Economics, IPB University, Bogor, Indonesia
Bambang Juanda
Department of Economics, IPB University, Bogor, Indonesia
Tony Irawan
Department of Economics, IPB University, Bogor, Indonesia

Demand Labor, Economic Growth, Education, Human Capital, Simultaneous Equation

  1. Adeyemi PA, Ogunsola AJ. 2016. The Impact of Human Capital Development on Economic Growth in Nigeria: ARDL Approach. IOSR Journal Of Humanities And Social Science Volume 21, Issue 3: 01-07.
  2. Benhabib J, Spiegel M. 1994. The Role of Human Capital in Economic Development Evidence from Aggregate Cross-Country Data. Journal of Monetary Economics No. 34, s.143-173.
  3. Blanchard O, Johnson DR. 2013. Macroeconomics. New Jersey, US: Prentice Hall
  4. Ekins P, Max-Neef M. 1992. Real-Life Economics · Understanding Wealth Creation. New York, US: Routledge
  5. Juanda B. 2009. Ekonometrika: Pemodelan dan Pendugaan. Bogor: IPB Press
  6. Kuznets S. 1973. Modern Economic Growth: Findings and Reflections. The American Economic Review, 63(3):247-258. Retrieved from www.jstor.org/stable/1914358
  7. Lavrinovicha I, Lavrinenkob O, Treinovskisc JT. 2015. Influence of Education on Unemployment Rate and Incomes of Residents. Procedia - Social and Behavioral Sciences 174(2015):3824-3831
  8. Mehrara M, Musai M. 2013. The Relationship between Economic Growth and Human Capital in Developing Countries. International Letters of Social and Humanistic Sciences 5. 55-62. 10.18052/www.scipress.com/ILSHS.5.55.
  9. Pelinescu E. 2015. The Impact of Human Capital on Economic Growth. Procedia Economics and Finance. 22. 10.1016/S2212-5671(15)00258-0.
  10. Romer P. 1989. Human Capital and Growth: Theory and Evidence. NBER Working Paper Series No. 3173: 1-41.
  11. Solow R. 1956. A Contribution to the Theory of Economic Growth. The Quarterly Journal of Economics Vol. 70, No.1: 65-94

Publication Details

Published in : Volume 7 | Issue 1 | January-February 2020
Date of Publication : 2020-02-25
License:  This work is licensed under a Creative Commons Attribution 4.0 International License.
Page(s) : 124-130
Manuscript Number : IJSRSET207120
Publisher : Technoscience Academy

Print ISSN : 2395-1990, Online ISSN : 2394-4099

Cite This Article :

Is Sugiyanti, Bambang Juanda, Tony Irawan, " Analysis of Human Capital on Economic Growth and Labor Demand in Indonesia, International Journal of Scientific Research in Science, Engineering and Technology(IJSRSET), Print ISSN : 2395-1990, Online ISSN : 2394-4099, Volume 7, Issue 1, pp.124-130, January-February-2020. Available at doi : https://doi.org/10.32628/IJSRSET207120      Citation Detection and Elimination     |     
Journal URL : https://ijsrset.com/IJSRSET207120

Article Preview