Title:
Impact of Inflation on Unemployment and Poverty in Indonesia

Authors:
I Made Suparta, Indonesia

Abstract:

This study investigated how inflation affects unemployment and poverty levels in 34 Indonesian provinces from 2014 to 2022. Using Eviews for direct impact analysis, the researchers employed two models (REM for Model 1, FEM for Model 2) and the Sobel test for indirect effects. Model 1 revealed a notable inverse correlation between inflation and unemployment, which aligns with the Phillips curve principle of a trade-off. Model 2 indicated that inflation directly and significantly reduced poverty, and unemployment also directly and significantly reduced poverty. However, the Sobel test revealed a significant indirect impact: higher inflation, which influenced unemployment and ultimately led to increased poverty.

DOI: https://doi.org/10.51505/IJEBMR.2025.9619