The Effect of Investment and Inflation on the Open Unemployment Rate with GRDP as the Mediating Factor

Aims: The study examined the effect of investment and inflation on the unemployment rate with gross regional domestic product (GRDP) as a mediating factor, in Central Java from 2019 to 2022.

Study Design: This study was employed the mediating regression analysis to solve the different findings on the effect of investment to unemployment rate. GRDP has a potential role as mediating factor on the causal effect.

Place and Duration of Study: The population of this research is 35 districts or cities in Central Java Province for 2019–2022 period.

Methodology: This study is secondary data taken from the Central Bureau of Statistics. The method used to collect data is purposive sampling with data analysis using the Structural Equation Modeling approach. Tests worked are R Square Test, Q Square Test, Direct Hypothesis Test, and Indirect Hypothesis Test.

Results: The results show that: (1) Investment has no significant effect on Unemployment Rate, (2) GRDP has a negative effect on the Unemployment Rate, (3) Investment has a positive effect on GRDP, (4) GRDP can mediate the effect of Investment on the Unemployment Rate, and (5) Inflation has a negative effect on Unemployment Rate.