THE EFFECT OF WAGE LEVELS, INVESTMENT, AND THE COVID- 19 PANDEMIC AS DUMMY VARIABLES ON COAL INDUSTRY EMPLOYMENT IN INDONESIA 2014-2023

Abstract

This study analyzes the effect of wage levels, investment, and the COVID-19 pandemic as dummy variables on employment in the Indonesian coal industry during the 2014-2023 period. Using a quantitative approach with multiple linear regression analysis on panel data, the results show that the three independent variables simultaneously have a significant effect on employment. Partially, the wage level is found to have a significant negative effect on employment, consistent with classical economic theory which states that an increase in wages can increase production costs and encourage companies to reduce labor demand or substitute capital. Investment has a significant positive effect on labor absorption, supporting the neoclassical investment theory which explains that an increase in capital will boost productivity and labor demand through a multiplier effect. The COVID-19 pandemic (as a dummy variable) also shows a significant negative effect on employment, confirming the adverse impact of this external shock on the coal industry labor market. The coefficient of determination (R-squared) of 98.95% indicates that variations in wage rates, investment, and the COVID-19 pandemic are able to explain almost all variations in employment, while the rest is explained by other variables outside the model. This study provides important implications for the government in formulating effective employment and investment policies, as well as for companies in optimizing operational and employment strategies amid market dynamics.