Factors Influencing Labor Absorption in Micro and Small Industries on Java Island (2017-2022): An Analysis of Provincial Minimum Wage, Industrial Units, and Economic Output

Abstract

Increasing population growth has led to an abundant labor force. The micro and small industries are among the jobs that can absorb this workforce. Therefore, this study analyzes factors affecting labor absorption in the Mirko and small industries. Research samples were taken from six provinces on Java Island from 2017 to 2022. The independent variables are Provincial Minimum Wage, Number of Micro and Small Industry Units, Output Value, and Input Value—analysis using panel data regression by processing using Eviews 12. The research’s findings show that independent variables substantially influence labor absorption in micro and small industries. Partially, the provincial minimum wage negatively impacts the labor absorption of micro and small industries in Java Island during 2017-2022, while the number of Micro and Small Industry units, output value, and input value have a positive effect.