The Effects of Number of Industrial Enterprises, Value of Input, Value of Output, and Regional Minimum Wage on Labor Demand in Indonesia : An Empirical Study on Micro Industrial Enterprises

The purpose of this research is: (1) to identify the effects of variables of: the number of industrial enterprises, the value of input, the value of output, and the regional minimum wage on the labor demand in Indonesia, especially in micro industrial enterprises, (2) to detect the elasticities of the variables toward the labor demand in the micro enterprises. To estimate the data, regression of panel data is used. The results of the research show that the variable of the number of micro industrial enterprises positively and significantly affects the labor demand of micro industrial enterprises. The variable of input value negatively affects the labor demand of micro industrial enterprises but not significant. The variable of output value positively affects the labor demand of micro industrial enterprises but not significant. While the variable of regional minimum wage negatively and significantly affects the labor demand of micro industrial enterprises. All variables are inelastic on the labor demand. The government needs to stimulate the growth of the number of micro industrial enterprises to be able to absorb more labors. The micro industrial enterprises need to build relationships with other companies for the mutually benefit, strengthen and support each other