The Role of Education and Unemployment in Poverty in Indonesia: A Provincial Panel Data Analysis, 2020–2025

Abstract

Poverty remains a structural challenge in Indonesia's economic development, even as the direction of post-pandemic recovery has become fairly clear in recent years. This study is motivated by the concern that improving national poverty figures often mask sharp disparities across regions, and that the relationship among education, unemployment, and poverty cannot be fully understood from aggregate data alone. Drawing on official Statistics Indonesia (BPS) data for 2020–2025, the study explores how education and open unemployment shape poverty patterns in Indonesia, while testing whether a region's structural characteristics also influence the strength of that relationship. Rather than presenting a full-scale provincial panel covering all 34 provinces, the study transparently takes a more limited approach combining the national trend with case studies of several provinces whose data could be fully and officially traced as a consequence of open-data access constraints encountered during preparation. This approach was deliberately chosen to ensure that every figure used is genuinely drawn from official releases rather than unfounded estimates. The findings show that open unemployment plays an important role in driving poverty, and this effect becomes far more apparent once differences in regional characteristics are taken into account   an indication that local structural factors cannot be ignored in poverty analysis. The level of education also appears to move together with declining poverty, although limited variation in the national data makes its pure effect difficult to separate from that of unemployment. The cross-provincial comparison reinforces this picture: regions with lagging human development consistently record far higher poverty than advanced metropolitan regions, and that gap narrows only very slowly over time. The study concludes with a recommendation that future research expand data coverage to all 34 provinces using BPS microdata (Susenas and Sakernas), and calls for a policy strategy that combines expanded access to upper-secondary education with formal job creation in provinces with lagging Human Development Index (HDI) scores.