Analysis of Labor Force Participation Rate in Riau Province: A Spatial Autoregressive Approach
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Abstract
The labor force participation rate (LFPR) is one of the important indicators for measuring the participation of the labor force involved in economic activities. In Riau Province, LFPR has exceeded half the population, resulting in increasingly tight job competition. This research aims to model the factors influencing LFPR in Riau Province in 2021 using the Spatial Autoregressive Model (SAR). Based on the Moran Index, there is positive spatial autocorrelation in LFPR, while based on the Lagrange Multiplier test, the SAR model is appropriate to use because of the lag dependence on the dependent variable. SAR analysis shows that the non-labor force variables (????1), poverty line (????2), productive age population (15-64 years) (????3), and population growth rate (????4) have a significant positive influence on LFPR. In contrast, the type ratio variable gender (????5) has a negative influence. Apart from that, a lag coefficient of 0.4935 was obtained, which means that if the value of the LFPR figure in a region increases by 1 unit, it will increase by 0.4935 times the average LFPR in neighboring areas of the region. This highlights the need for policies aimed at increasing the LFPR to account for regional coordination, as changes in one area's LFPR can influence adjacent regions. Consequently, the Riau Provincial Government should promote collaboration among districts and cities to formulate a cohesive strategy, while each district should design policies that align with their unique local characteristics and the spatial dynamics of surrounding areas.
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