The Influence of ZIS, GDP, Inflation, and Population on Unemployment in Indonesia: VECM Approach
Rohmatul Farohah Kholison, Nur Zakiya Hafizhah, Lailatul Hikmah

Universitas Airlangga

Abstract

This study analyzes the short-term and long-term impacts of Zakat, Infaq, and Sadaqah (ZIS), Gross Domestic Product (GDP), inflation, and population on unemployment rates in Indonesia using the Vector Error Correction Model (VECM). Utilizing quarterly data from the first quarter of 2011 to the fourth quarter of 2023 (2011Q1-2023Q4), the results indicate that, in the short term, ZIS, GDP, inflation, and population do not significantly affect unemployment. ZIS funds are primarily directed towards consumptive programs- GDP growth does not immediately create new jobs- moderate inflation does not influence short-term hiring decisions- and population growth requires time for labor market adjustments. However, in the long term, ZIS and GDP have a negative and significant effect on unemployment, reducing it through productive programs and sustained economic growth. Conversely, inflation and population exhibit a positive and significant impact on long-term unemployment, increasing it due to economic uncertainty from high inflation and disproportionate population growth relative to job creation. This study underscores the importance of shifting policies towards productive ZIS utilization, investing in labor-intensive sectors, controlling inflation, and creating employment opportunities to address structural labor market challenges.

Keywords: Unemployment, Zakat Infaq and Sadaqah (ZIS), Gross Domestic Product (GDP), Inflation, Population Growth, Vector Error Correction Model (VECM)

Topic: Islamic social finance