Panel data regression approach for analysis of the open unemployment rate in Indonesia

The Open Unemployment Rate (OUR) is the percentage of the number of unemployed to the total workforce. According to the Ministry of National Development Planning of the Republic of Indonesia, the OUR in 2015 to 2020 in Indonesia did not reach the government's target. In 2020, Indonesian OUR become 7.07% compared to the previous year which was only around 5.23%. The increase in OUR is thought to be the impact of the Covid-19 pandemic. Thus, the researcher wants to know what factors cause OUR in Indonesia not to meet the government's target for the 2015-2020 period by using the panel data regression method. The variables that are thought to influence are the Provincial Minimum Wage (PMW), Labor Force Participation Rate (LFPR), School Enrollment Rate (SER) for 16-18 Years Old, and Gross Enrollment Rate (GER) for SHS (Senior High School). Panel data regression is a method by combining cross-section and time-series data, and panel regression is estimated not only individual effects but also time effects so that it can find out the characteristics of changes in the value of OUR for each province from time to time within a certain period of time. The best panel regression model for the OUR in Indonesia is the Fixed Effect Model for individual time. The significant variable on the Indonesian OUR is the Labor Force Participation Rate with an value of 89.85%.