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FORMOSA NEWS - Surabaya - Education Level Proves Key to Reducing Poverty Disparities Across East Java Regencies. Regional economic inequality and persistent poverty remain critical challenges across East Java Province. A new comprehensive study conducted by Erika Fitra Nur Aina from Universitas Negeri Surabaya reveals that education level is the single most powerful factor in reducing poverty across the province’s 38 regencies and cities. Published in 2026 in the Formosa Journal of Applied Sciences, the research highlights strategic economic levers necessary to bridge regional development gaps in Indonesia’s second-largest provincial economy.

Economic Context and Relevance
East Java Province plays a pivotal role in Indonesia's overall economic stability. However, beneath aggregate growth lies a deep geographic disparity. Urban industrial centers continuously outperform rural, coastal, and island regions, such as Madura and the Tapal Kuda area. The 2020–2024 timeframe presented a unique set of economic conditions, beginning with severe disruptions caused by the COVID-19 pandemic and followed by volatile global recovery efforts. To address regional disparities during this recovery, policymakers continuously balance three main economic indicators:
  • Labor Force Participation Rate (TPAK): The percentage of working-age population actively engaged in economic activity.
  • Regency/City Minimum Wage (UMK): A regulatory instrument designed to guarantee decent living standards and baseline income for workers.
  • Education Level: Measured via Mean Years of Schooling (RLS), representing human capital development and workplace adaptability.
Simplified Research Methodology
To evaluate these dynamics, Erika Fitra Nur Aina analyzed secondary panel data collected from the Central Statistics Agency (BPS) of East Java Province. The dataset combined time-series information from 2020 through 2024 across 38 regencies and cities, yielding 190 total observational data points. The study employed a quantitative explanatory approach using a Fixed Effect Model (FEM) panel data regression. This statistical approach allowed the researcher to isolate specific local economic factors while accounting for time-invariant differences among individual regencies and cities.

Key Research Findings
The research proves that the Labor Force Participation Rate, Minimum Wage, and Education Level collectively exert a statistically significant influence on poverty reduction across East Java. Together, these three variables account for 60 percent of the variation in poverty levels across the province's municipalities. Key findings from the empirical analysis include:
  • Education Has the Strongest Negative Impact on Poverty: Among all variables analyzed, education level demonstrated the largest and most consistent inverse relationship with poverty. Higher Mean Years of Schooling equips workers with cognitive skills, expanding access to higher-paying formal sector positions.
  • Minimum Wage Serves as a Vital Social Safety Net: Incremental adjustments to regency minimum wages directly enhance household purchasing power, protecting formal and structured informal workers from falling beneath the poverty threshold.
  • Labor Force Participation Requires Job Quality: While higher labor participation generally reduces poverty, its effectiveness varies across regions. In agricultural and informal-heavy zones, high participation without quality job creation leads to a "working poor" dynamic.
  • Significant Educational Disparities Persist: The average duration of schooling across East Java stands at 8.22 years (equivalent to junior high school Grade 8). Urban hubs like Surabaya and Malang exceed 11 years of average schooling, whereas rural regencies in Madura lag between 4.85 and 7.5 years.
Implications for Public Policy and Business
These findings provide clear guidance for policymakers, educational institutions, and regional businesses. While minimum wage increases act as a immediate income stabilizer, long-term poverty alleviation requires structural investments in human capital and education infrastructure. Local governments in underdeveloped regions must focus on improving educational access and aligning vocational skills with industrial demands. Furthermore, setting minimum wages without corresponding increases in local labor productivity risks driving informalization in micro-enterprises. A balanced strategy linking education, targeted minimum wage policies, and high-quality job creation is essential for sustainable poverty reduction.

Author Profile
Erika Fitra Nur Aina. Universitas Negeri Surabaya (UNESA), Field of Expertise: Development Economics, Public Policy, and Applied Econometrics

Source
Erika Fitra Nur Aina: The Effect of Labor Force Participation Rate, Minimum Wage and Education in Regencies/Cities of East Java Province in 2020 - 2024. Formosa Journal of Applied Sciences (FJAS). Vol. 5, No. 7 2026, pp. 1537–1546
DOI: https://doi.org/10.55927/fjas.v5i7.79
URL: https://journalfjas.my.id/index.php/fjas