THE EFFECT OF HUMAN CAPITAL AND INSTITUTIONS ON ECONOMIC GROWTH OF MAGELANG CITY, 1983-2013
Rois Mustofa1 Prof. Lincolin Arsyad, Ph.D.2 Master of Economics of Development Program Faculty of Economics and Business, Gadjah Mada University
ABSTRACT
Determination of Magelang as regional growth pole of Purwomanggung Region based on Central Java Provincial Regulation No. 6 of 2010 on Spatial Planning (Spatial) Central Java Year 2009 to 2029, providing a logical consequence that Magelang has to become an anchor for the area Purwomanggung to ensure economic growth an ongoing basis. Conditions without natural resources, small area and low population numbers make the main role of human capital for economic growth.
This study aims to analyze the influence of human capital to economic growth and institutional Magelang with time series data from the years 1983 to 2013. Human capital proxy examined using the average length of school, life expectancy and labor productivity (GDP proportion of the labor force), while the institutional variables used dummy variables Autonomy. The method of analysis used is the estimation of dynamic linear regression model with Engel-Grenger ECM (Error Correction Model).
The results showed that in the short term, human capital and institutions are not statistically significantly affect economic growth, in this case the real per capita income. However, both these variables influence positive direction. Productivity variable positive and significant effect in both the short term and long term. The results of further analysis of empirical data showed that the negative effect of the average school attainment to the real per capita income in the long term is an effect of not absorb the entire output of formal education, especially higher education graduates in the labor market. This indicates a lack of job creation for graduates of higher education in Magelang and reminds us important basic assumption that investment in human capital will be less meaningful if full employment in the economy is not reached.
Keywords: Human Capital, Economic Growth, Per Capita Real Income, Institutional.
