The Role of MSME on Unemployment in Indonesia

Unemployment is one of the main problems of complex socio-economic development. This paper aims to analyze Schumpeter's theory of economic development to examine the "Schumpeter effect" and the "refugee effect". This research analysed empirical data on the growth of MSMEs an...

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Bibliographic Details
Published inTurkish journal of computer and mathematics education Vol. 12; no. 13; pp. 2519 - 2525
Main Author Prasetyo, P Eko
Format Journal Article
LanguageEnglish
Published Gurgaon Ninety Nine Publication 01.01.2021
Subjects
Economic analysis
Economic conditions
Economic crisis
Economic development
Economics
Empirical analysis
Employment
Entrepreneurs
Entrepreneurship
Income distribution
Inequality
Mathematics education
Refugees
Small & medium sized enterprises-SME
Social change
Startups
Sustainable development
Unemployment
Indonesia
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Summary:Unemployment is one of the main problems of complex socio-economic development. This paper aims to analyze Schumpeter's theory of economic development to examine the "Schumpeter effect" and the "refugee effect". This research analysed empirical data on the growth of MSMEs and the unemployment rate in Indonesia. The data dimension used is the time series ratio data after the 2008 economic crisis, quarterly data for the 2009-2019 Q3 period. The main analysis results show that the Schumpeter effect is valid, and the refugee effect is less valid. This means that the growth of MSMEs can significantly reduce the unemployment rate, and there is a high unemployment rate due to the low growth of MSMEs. However, the existence of a high unemployment rate is not automatically able to trigger the growth of MSMEs, except only for micro businesses because these businesses do not require much investment capital or working capital.
ISSN:1309-4653