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Assessing the unemployment rate as a mediator between SMEs and economic growth

Jurnal Perspektif Pembiayaan dan Pembangunan Daerah · Vol. 12 No. 5 (2024) · pp. 459–470

DOI
10.22437/ppd.v12i5.37800
ISSN
2355-8520, 2338-4603
Published
2024-12-31
Publisher
Program Magister Ilmu Ekonomi Pascasarjana Universitas Jambi
Language
en
License
creativecommons.org/licenses/by/4.0

Abstract

Economic growth and unemployment reduction in developing countries can be strengthened by improving the business quality of SMEs. As SMEs dominate Indonesia’s industrial structure, this study examines their relationship with economic growth, with unemployment rates as a moderating variable, in West Java, Central Java, and East Java from 2015 to 2022. Using Structural Equation Modeling (SEM) on 96 observations, the findings reveal that the number of SME business units has a significant negative impact on the unemployment rate, whereas total assets have a positive impact. A higher asset value enhances the capacity for modernization and digitalization, which, in turn, reduces labor absorption and potentially increases unemployment. Additionally, a decline in the unemployment rate positively influences economic growth, which is consistent with Okun’s Law, though with a relatively low magnitude. These findings highlight the need for government policies to facilitate SME business development by improving production standards, expanding access to business capital, and enhancing market reach. This approach aligns with the UMKM Naik Kelas (SME Scale-Up) program, which aims to promote sustainable SME growth and economic resilience.

Keywords

Collaboration network of the authors

37 authors · 101 co-authorship links

Hover or tap a name to highlight its co-authors. Double-click to open the author's page.

  • Sebelas Maret University
  • Hasanuddin University
  • Affiliation unknown
  • Different organisations
  • Same organisation
  • Affiliation unknown
  • Thicker line = more joint articles · bigger circle = more articles
Show as table
Co-authorOrganisationJoint articles
Emi WidiyantiAffiliation unknown2
Phany Ineke PutriAffiliation unknown2
Vita Kartika SariAffiliation unknown1
Nurul IstiqomahAffiliation unknown1
Izza MafruhahAffiliation unknown1
Dewi IsmoyowatiAffiliation unknown1
Nurul HasanaAffiliation unknown1
Erlyna Wida RiptantiSebelas Maret University1
Mujiyo MujiyoAffiliation unknown1
Hardian NingsihAffiliation unknown1
Rade Rara Aulia QonitaAffiliation unknown1
Prahastiwi UtariSebelas Maret University1
Dwiningtyas PadmaningrumAffiliation unknown1
Suminah SuminahAffiliation unknown1
Nuning SetyowatiAffiliation unknown1
Maria Pinkan Elionora SepoetriAffiliation unknown1
Lutojo LutojoAffiliation unknown1
Sutrisno Hadi PurnomoAffiliation unknown1
Ibnu Muchtar RosyidiAffiliation unknown1
Khairullah KhairullahAffiliation unknown1
Yunastiti PurwaningsihAffiliation unknown1
H. HariniAffiliation unknown1
Siswanto SiswantoHasanuddin University1
Ahmad MunirAffiliation unknown1
Rr. Herini Siti AisyahAffiliation unknown1
Sudarsono SudarsonoAffiliation unknown1
Nur Basuki MinarnoAffiliation unknown1
Raissa Virgy RiandaAffiliation unknown1
Rama Azalix RiandaAffiliation unknown1
M. Hadi ShubhanAffiliation unknown1
Siswandi HendartaAffiliation unknown1
Xavier NugrahaAffiliation unknown1
Alam Subuh FernandoAffiliation unknown1
Alya AdelinaAffiliation unknown1

Affiliations come from OpenAlex; journal OAI-PMH metadata carries none. Authors without an OpenAlex ID are matched by name, which can merge or split people.

Metadata source: OAI-PMH (metadata jurnal) https://online-journal.unja.ac.id/index.php/JES/oai, first harvested 6 Nov 2026, last seen 8 Nov 2026.
Original metadata (oai_dc) 
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	<dc:title xml:lang="en">Assessing the unemployment rate as a mediator between SMEs and economic growth</dc:title>
	<dc:creator xml:lang="en">Cahyadin, Malik</dc:creator>
	<dc:creator xml:lang="en">Irianto, Heru</dc:creator>
	<dc:creator xml:lang="en">Ertimi, Basem</dc:creator>
	<dc:subject xml:lang="en">Economic growth</dc:subject>
	<dc:subject xml:lang="en">SEM</dc:subject>
	<dc:subject xml:lang="en">SMEs</dc:subject>
	<dc:subject xml:lang="en">Unemployment</dc:subject>
	<dc:description xml:lang="en">Economic growth and unemployment reduction in developing countries can be strengthened by improving the business quality of SMEs. As SMEs dominate Indonesia’s industrial structure, this study examines their relationship with economic growth, with unemployment rates as a moderating variable, in West Java, Central Java, and East Java from 2015 to 2022. Using Structural Equation Modeling (SEM) on 96 observations, the findings reveal that the number of SME business units has a significant negative impact on the unemployment rate, whereas total assets have a positive impact. A higher asset value enhances the capacity for modernization and digitalization, which, in turn, reduces labor absorption and potentially increases unemployment. Additionally, a decline in the unemployment rate positively influences economic growth, which is consistent with Okun’s Law, though with a relatively low magnitude. These findings highlight the need for government policies to facilitate SME business development by improving production standards, expanding access to business capital, and enhancing market reach. This approach aligns with the UMKM Naik Kelas (SME Scale-Up) program, which aims to promote sustainable SME growth and economic resilience.</dc:description>
	<dc:publisher xml:lang="en">Program Magister Ilmu Ekonomi  Pascasarjana Universitas Jambi</dc:publisher>
	<dc:date>2024-12-31</dc:date>
	<dc:type>info:eu-repo/semantics/article</dc:type>
	<dc:type>info:eu-repo/semantics/publishedVersion</dc:type>
	<dc:type xml:lang="en">Peer-reviewed Article</dc:type>
	<dc:format>application/pdf</dc:format>
	<dc:identifier>https://online-journal.unja.ac.id/JES/article/view/37800</dc:identifier>
	<dc:identifier>10.22437/ppd.v12i5.37800</dc:identifier>
	<dc:source xml:lang="en">Jurnal Perspektif Pembiayaan dan Pembangunan Daerah; Vol. 12 No. 5 (2024): Jurnal Perspektif Pembiayaan dan Pembangunan Daerah; 459 - 470</dc:source>
	<dc:source>2355-8520</dc:source>
	<dc:source>2338-4603</dc:source>
	<dc:language>en</dc:language>
	<dc:relation>https://online-journal.unja.ac.id/JES/article/view/37800/19992</dc:relation>
	<dc:rights xml:lang="en">Copyright (c) 2025 Malik Cahyadin, Heru Irianto, Basem Ertimi</dc:rights>
	<dc:rights xml:lang="en">https://creativecommons.org/licenses/by/4.0</dc:rights>
</oai_dc:dc>