Determinants of Unemployment Rate: The Role of MSMEs, Inflation, and Economic Growth

This study is motivated by the unemployment rate in Indonesia, which continues to fluctuate from year to year, thus requiring efforts to increase labor absorption. The purpose of this study is to determine the effect of MSME development, inflation, and economic growth on the unemployment rate in Indonesia. The method used in this study is quantitative, employing multiple linear regression analysis with time series data for the period 2013-2024. The results show that MSME development has a negative but insignificant effect on the unemployment rate in Indonesia, inflation has a positive but insignificant effect on the unemployment rate in Indonesia, while economic growth has a negative and significant effect on the unemployment rate in Indonesia during the 2013-2024 period. In addition, MSME development, inflation, and economic growth simultaneously have a significant effect on the unemployment rate in Indonesia. These findings imply that policies should focus on enhancing the quality and productivity of economic growth and MSMEs rather than merely expanding the number of business units.