
 
 
 
1.  Domestic Investment  or  Domestic Investment 
(PMDN). 
According  to    Regulation  Number  27  of  2007 
concerning Investment,  what  is  meant by domestic 
capital  is  part  of  the  wealth  of  the  people  of 
Indonesia,  including  rights  and  objects,  both  state-
owned and national or private, which are domiciled 
in  Indonesia,  which  set  aside  /  provided  to  run  a 
business. 
 
2.  Foreign  Investment  or  Foreign  Investment 
(PMA) 
  Foreign  investment  is  capital  owned  by  a 
foreign  country,  an  individual  from  a  foreign 
country,  a  foreign  business  entity,  a  foreign  legal 
entity, and / or an Indonesian legal  entity which is 
partly or wholly owned by a foreign party. Foreign 
investment is an investment activity to do business 
in the territory of the Republic of Indonesia carried 
out by foreign investors, both those who use foreign 
capital fully and share with domestic investors. 
2.2  Previous Research 
(Chusna,  2013)   reviewing  the  influence  of  the 
growth rate of the industrial sector, investment, and 
wages on the absorption of industrial sector labor in 
the Central Java province in 1980-2011. This study 
was  analyzed  using  multiple  linear  regression 
analysis.  The  conclusion  of  this  study  shows  that 
industrial  sector  growth  shows  a  declining  trend 
while investment, wages and labor absorption in the 
industrial  sector  shows  an  increasing  trend,  the 
growth rate  of the  industrial  sector  does  not  affect 
the  absorption  of  industrial  sector  employment, 
while  investment  and  wages  affect  absorption 
industrial sector workforce in Central Java. 
(Darman, 2013) examines the effect of economic 
growth  on  the  unemployment  rate:  Okun's  Legal 
analysis. This study uses time series data from 1990-
2013. The method used is the difference version of 
Okun's  law  Okun  gain  coefficient  and  analysis  of 
ordinary  least  squares  (OLS)  to  obtain  regression 
coefficients.  The  results  of  the  study  indicate  that 
Okun's  law  applies  in  Indonesia,  where  the  Okun 
coefficient is negative. The unemployment rate tends 
to  increase  along  with  the  achievement  of  GDP 
growth. 
(Dimas and Woyanti, 2009), conducted research 
on employment absorption in DKI Jakarta in 1990-
2004. The analysis technique used is multiple linear 
regression. The results indicate that GDP growth had 
a positive effect on employment in Jakarta, while the 
variable  wage  and  investment  negatively  affect 
employment.  These  negative  effects  caused  by  a 
more  focused  investment  coming  to  the  capital-
intensive  business  than  labor-intensive,  so  that 
investment does not increase employment. 
(Sobita  and  Suparta,  2014)  conducted  research 
on economic growth and employment in Lampung. 
the  period  2008-2012.  The  data  analysis  method 
used  is  quantitative  data  analysis  (statistics)  using 
panel  data  analysis.  These  results  indicate  that  the 
independent  variable  and  the  real  GRDP  Capital 
prices in agriculture significantly positive effect on 
employment. The increase in real GDP and capital in 
agriculture  will  increase  employment.  Meanwhile 
the  real  wage  variable  significantly  has  a  negative 
effect  on  employment.  Increase  in  real  wages  will 
reduce employment. 
(Sulistiawati,  2012)  conducted  a  study  on  the 
effect of minimum wages on employment and social 
welfare in the province in Indonesia 2006-2010. The 
analytical  method used  is the  path analysis  model. 
These  results  indicate  that  the  minimum  wage 
increase  will  reduce  the  use  of  labor  with  low 
productivity  that  is  generally  absorbed  in  the 
primary  sector,  the  sector that absorbs  most  of  the 
manpower.  Second,  the  absorption  of  labor  has  a 
positive but not significant effect on social welfare. 
The influence of employment on social welfare has 
path  coefficient  of  0.08  with  a  significance 
probability value (Sig) of 0.332. The results of this 
study  showed  that  the  increase  in  employment  did 
not  cause  an  increase  in  social  welfare  in  the 
provinces in Indonesia because: (1).  The minimum 
wages  received  by  workers  is  lower  than  the 
minimum  basic  needs,  (2)  the  minimum  wage 
earned by a lower level of tax revenue. 
(Mahalli,  2008)  examining  employment 
opportunities  and  economic  growth  in  the  city  of 
Medan.  The  analysis  tool  used  is  the  elasticity 
calculation formula. Using the concept of elasticity 
found the results of that labor  elasticity coefficient 
of  0.207%  (Inelastic),  means  that for  every 1%  of 
economic  growth  led  to  employment  opportunities 
open to 0.207%. While the most sensitive sectors for 
employment in financial services with employment 
elasticity  coefficient  of  1,023%  (elastic).  On  the 
demand side, the average education level of workers 
is occupied by Diploma III (40.67%). Followed by 
postgraduate level of 30.67% and secondary school 
(25.33%) until 2010 
(Arida,  Zakiah  and  Julaini,  2015)  conducted 
research on the analysis of labor demand and supply 
in the agricultural sector in Aceh Province. Analysis 
of the data used in this study using an econometric 
model with multiple single equation is the method of 
SEABC 2018 - 4th Sriwijaya Economics, Accounting, and Business Conference
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