The Influence of Capital Expenditures and Education on GRDP and Unemployment in Riau Islands

This study analyzes the impact of capital expenditure and education (average years of schooling) on Gross Regional Domestic Product (GRDP) and unemployment (open un-employment rate) in the Riau Islands Province during 2015–2023. This study uses a quanti-tative approach with panel data covering five districts and two cities, analyzed through path analysis with Fixed Effect Model (FEM) estimation. The results show that capital expendi-ture and average years of schooling have a positive and significant effect on GRDP, but do not have a significant direct effect on the open unemployment rate. Conversely, GRDP has a positive and significant effect on the open unemployment rate, indicating jobless growth. The Sobel test shows that GRDP does not mediate the effect of capital expenditure on the open unemployment rate but mediates the effect of average years of schooling on the open unem-ployment rate. These findings indicate that economic growth in the Riau Islands is still dom-inated by capital-intensive sectors, so that the increase in regional output has not been fully accompanied by job creation.