The Effects of Higher Education and Health on the Open Unemployment Rate in Indonesia

Abstract

Open unemployment remains one of Indonesia's major socioeconomic challenges because it reflects the economy's ability to absorb labor and optimize human capital. Although higher education participation and public health indicators have improved over the past three decades, empirical evidence regarding their long-term influence on open unemployment using national time-series data remains limited and inconclusive. This study aims to examine the effects of higher education and health on Indonesia's open unemployment rate during the 1994–2023 period. A quantitative approach with a descriptive-associative design was employed using secondary time-series data obtained from the World Bank Open Data. Open unemployment rate was used as the dependent variable, while higher education was proxied by School Enrollment, Tertiary, and health was measured by Life Expectancy at Birth. Multiple linear regression analysis was conducted after fulfilling the classical assumption tests, including normality, multicollinearity, heteroscedasticity, and autocorrelation using the Cochrane Orcutt procedure. The findings reveal that higher education has a negative and statistically significant effect on the open unemployment rate, indicating that increased participation in tertiary education enhances human capital quality and improves employment opportunities. Conversely, health does not significantly affect open unemployment. Simultaneously, higher education and health significantly influence open unemployment, with an Adjusted R² value of 0.472, indicating that both variables explain 47.2% of the variation in unemployment, while the remaining variation is explained by other economic factors. These findings highlight that higher education plays a more dominant role than health in reducing open unemployment in Indonesia.