The Impact of Labor Market Dynamics on Regional Development Inequality in Central Sulawesi Province
Keywords:
Inequality, Development, Labor MarketAbstract
This study aims to analyze the effect of labor market dynamics on development inequality in Central Sulawesi Province. Using panel data from 13 regencies/cities over the period 2015–2024, this study employs panel data regression with the Fixed Effect Model as the selected estimation approach based on the Chow Test and Hausman Test results. To address heteroskedasticity, autocorrelation, and cross-sectional dependence, robust estimation using Driscoll–Kraay Standard Errors was applied. The results show that the Open Unemployment Rate has a positive and significant effect on income inequality, indicating that higher unemployment widens income disparity. The Regional Gross Domestic Product per capita has a negative and significant effect, suggesting that inclusive economic growth contributes to reducing inequality. Meanwhile, the Labor Force Participation Rate has a negative but statistically insignificant effect. These findings imply that reducing unemployment and promoting inclusive economic growth are essential policy priorities to address development inequality in Central Sulawesi Province.
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