West Java — Labor force size, Regional Own-Source Revenue (ROSR), and Average Years of Schooling (AYS) have a positive and significant influence on the Gross Regional Domestic Product (GRDP) of regencies and cities across West Java during the 2015–2025 period. The finding comes from a study by Dinda Firdah Alfiani and M. Taufiq from the Development Economics Study Program at UPN “Veteran” Jawa Timur. By examining data from 27 regencies and cities over 11 years, the study demonstrates that workforce availability, regional fiscal capacity, and educational attainment are important factors in strengthening regional economic performance in West Java.
West Java is one of Indonesia’s largest contributors to national economic activity and has a strong industrial base. Manufacturing, electronics, textiles, food processing, furniture, petrochemicals, energy, and service activities are concentrated in several parts of the province. However, this economic strength has not translated into equal GRDP performance across all regencies and cities. Metropolitan and industrial areas have developed more rapidly, while regions that remain dependent on agriculture and traditional economic activities continue to face difficulties in increasing productivity and regional output.
The differences are particularly visible in regional GRDP. Bekasi Regency recorded the highest GRDP in 2025, reaching IDR 308,568.27 billion, followed by Bandung City and Karawang Regency. At the other end of the scale, Pangandaran Regency recorded GRDP of only IDR 9,850.57 billion, while Banjar City recorded IDR 4,083.17 billion. The wide gap indicates that industrial and urban regions continue to dominate West Java’s economy, while rural and agriculture-based areas remain comparatively less developed.
Similar differences can be observed in the labor market. Bogor Regency has the largest labor force, with approximately 2.8 million people, while Banjar City has the smallest. Yet a large labor force does not automatically produce high GRDP. Bekasi Regency, for example, has the highest GRDP despite having a smaller labor force than Bogor. This suggests that the size of the workforce needs to be supported by appropriate skills, productivity, and the capacity of local economic sectors to absorb workers.
Regional fiscal capacity also varies substantially. Bogor Regency recorded the highest Regional Own-Source Revenue in 2025 at IDR 5,019.52 billion, while Banjar City recorded only IDR 155.31 billion. Differences in local revenue-generating capacity can affect the ability of regional governments to provide infrastructure and support economic activities. Regions with stronger own-source revenue generally have greater fiscal space for development, although the study shows that high local revenue needs to be accompanied by productive economic activity to translate effectively into higher GRDP.
Education represents another major source of regional disparity. Average Years of Schooling in Indramayu Regency stood at only 7.06 years, while Bekasi City, Depok City, and Bandung City recorded more than 11 years. These differences reflect continuing disparities in human capital quality across West Java. Longer educational attainment can improve workforce capability and productivity, but its economic benefits are likely to be greater when sufficient productive employment opportunities are available.
To examine these relationships, Alfiani and Taufiq employed a quantitative approach using panel data regression. The study covered all 27 regencies and cities in West Java from 2015 to 2025, producing 297 observations. GRDP, labor force size, and Average Years of Schooling data were obtained from the Central Statistics Agency of West Java, while Regional Own-Source Revenue data were obtained from the Directorate General of Fiscal Balance of the Ministry of Finance. The analysis was conducted using EViews 13.
The researchers compared several regression models to identify the most appropriate specification. The Chow Test produced a probability value of 0.0000, while the Hausman Test produced a probability value of 0.0001. Both values were below the 0.05 significance threshold, leading the researchers to select the Fixed Effects Model as the most appropriate model. This model allows the analysis to account for characteristics that differ across the 27 regencies and cities.
The initial regression analysis identified heteroscedasticity in the model. The researchers therefore applied White Cross-Section Robust Standard Errors to correct the standard errors. After the correction, all three main variables remained statistically significant. Labor force size recorded a coefficient of 0.012134 with a probability value of 0.0374. Regional Own-Source Revenue recorded a coefficient of 22.95179 with a probability value of 0.0000, while Average Years of Schooling recorded a coefficient of 6,409.941 with a probability value of 0.0087.
The results demonstrate that labor force size has a positive and significant effect on GRDP. A larger workforce that is productively engaged in economic activity can increase the capacity to produce goods and services, thereby expanding regional output. This finding supports neoclassical economic growth theory, which identifies labor as one of the fundamental factors of production. In West Java, the relationship is particularly visible in areas such as Bekasi, Karawang, and Bandung, where manufacturing and high-value-added services play major roles in the regional economy.
Regional Own-Source Revenue also has a positive and significant effect on GRDP. This means that stronger local revenue-generating capacity is associated with higher regional economic output. However, the study does not suggest that high ROSR automatically guarantees the highest GRDP. Purwakarta Regency provides an important example, as it achieved high GRDP despite having a moderate level of ROSR, largely because of the strength of its industrial sector.
Average Years of Schooling likewise has a positive and significant effect on GRDP. The finding indicates that education functions as a long-term investment in human capital, improving skills, technical efficiency, and economic productivity. However, the study also demonstrates that higher educational attainment alone does not guarantee high regional output. Depok and Cimahi, for example, have relatively high educational attainment but lower GRDP than Bekasi and Karawang, where industrial activity is stronger.
Taken together, the three variables explain almost all of the variation in GRDP within the research model. The Adjusted R-squared value reached 0.989070, or 98.90 percent, indicating that labor force size, ROSR, and Average Years of Schooling explain approximately 98.90 percent of the variation in GRDP across West Java’s regencies and cities. The remaining 1.10 percent is associated with other factors outside the model. The F-test also confirms that the regression model is statistically significant as a whole.
The findings suggest that regional governments should focus not only on increasing the size of the workforce but also on creating productive employment opportunities that match local capabilities. Regions with large labor forces but relatively low GRDP can improve infrastructure access and simplify investment licensing to encourage industrial and service-sector development. These measures can help shift workers from lower-productivity activities toward sectors with greater value added.
From a fiscal perspective, regions with high ROSR should direct public spending toward productive real-sector development. Industrial roads, integrated economic zones, and logistics facilities are among the types of infrastructure that can strengthen the connection between fiscal capacity and regional output. The experience of Purwakarta suggests that a strong industrial sector can significantly increase GRDP even when regional own-source revenue is not among the highest in the province.
Education policies also need stronger connections with labor-market requirements. Collaboration between educational institutions and companies can help graduates develop practical skills that match industry demand. This is particularly important in regions with high educational attainment but limited opportunities to fully utilize educated workers because of insufficient employment opportunities or mismatches between education and available jobs.
Overall, the study by Dinda Firdah Alfiani and M. Taufiq demonstrates that West Java’s economic performance is shaped by the combination of labor availability, regional fiscal capacity, and human capital quality. All three factors have positive effects on GRDP, but their economic contribution becomes more effective when improvements in education and workforce availability are accompanied by productive employment, stronger industrial activity, and closer alignment between education and labor-market needs. The researchers recommend that future studies incorporate additional variables such as investment, inflation, and infrastructure expenditure and expand the geographical scope to provide a more comprehensive picture of regional economic growth.
Authors
Dinda Firdah Alfiani — UPN “Veteran” Jawa Timur.
M. Taufiq — UPN “Veteran” Jawa Timur.
Research Source
Article Title: The Effect of Labor Force Size, Regional Own-Source Revenue, and Average Years of Schooling on Gross Regional Domestic Product in West Java
Journal: International Journal of Scientific Multidisciplinary Research (IJSMR), Vol. 4, No. 8, 2026, pp. 1915–1930.
DOI: https://doi.org/10.55927/ijsmr.v4i8.120
Journal Link: International Journal of Scientific Multidisciplinary Research (IJSMR)
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