Spatial Autocorrelation Test on the Average Unemployment in Indonesia

According to World Bank statistics in 2019, Indonesia ranked two in the average unemployment rate with 5.28% in South East Asia. Although the unemployment rate can be reduced by an equitable distribution of human resource empowerment and national development, the global pandemic COVID-19 made a major impact on increasing the rate of unemployment. This paper tests the spatial autocorrelation on the average unemployment in Indonesia using Ordinary Least Squares (OLS) and Moran’s I. The OLS method was used to examine the effects that affect the unemployment rate using an independent variable. In contrast, the Moran’s I used to prove the existence of spatial effect on the level of movement in Indonesia. From the experiment, there are four variables that influence the unemployment rate by using the OLS modeling method. The Moran’s I test showed a p-value = 0.006 with α = 0.05. Therefore, there is a spatial autocorrelation between provinces in Indonesia. In addition, the model is tested using the Variance Inflation Factor. The model showed a VIF score ¡10, therefore there is no collinearity and the assumption is fulfilled. The model is also being tested using dwtest, bptest, and Lilliefors test. The result showed p-value = 0.6231 for dwtest, p-value = 0.932 for bptest, and p-value = 0.08438 for Lilliefors test..