Effect of Minimum Wage on Unemployment in North Kalimantan

The annual minimum wage changes cause shifts in the labor market equilibrium. In a competitive labor market, the demand and supply of minimum wages result in a new minimum wage each year. This study presents evidence on the effect of minimum wages on unemployment in North Kalimantan. This evidence offers insights for policymakers in setting minimum wages. By utilizing aggregate data from districts/municipalities in North Kalimantan province and using ordinary least squares (OLS) techniques, this study finds that minimum wages have a significant effect on unemployment in North Kalimantan. These findings highlight the need for careful minimum wage determination, urging policymakers to consider additional evidence and pay attention to efficiency wage theory. This study contributes to the understanding of labor market policy, empowering professionals to make informed decisions that promote economic growth and social welfare.