ANALYSIS OF LABOR ABSORPTION IN THE AGRICULTURE AND INDUSTRIAL SECTORS USING A DEMOMETRIC APPROACH IN CENTRAL JAVA PROVINCE, 2014– 2023

Abstract

In Central Java Province, the industrial sector contributes the largest share to the Regional Gross Domestic Product (RGDP), yet agriculture continues to serve as the primary source of employment. This study examines the absorption of labor in the agricultural and industrial sectors across 35 Regencys and cities in Central Java over the 2014–2023 period, employing a demometric framework. Data were sourced from publications by Indonesia’s Central Statistics Agency (Badan Pusat Statistik) and the Central Java provincial Open Data portal. A quantitative analysis was conducted using multiple linear regression models with fixed effects. The findings reveal that, within the agricultural sector, labor absorption is negatively affected by both Agricultural RGDP and Foreign Direct Investment (FDI). In the industrial sector, FDI also has a negative effect, while the Regency/City Minimum Wage positively influences labor absorption. Moreover, demographic variables exhibit significant impacts across both sectors: the Dependency Ratio is positively associated with labor absorption, whereas the Average Years of Schooling correlates negatively. Based on these results, the study recommends implementing agricultural price protection measures, managing population dynamics, and accelerating industrial transformation.