Human Development and Minimum Wage as Determinants of Poverty and Unemployment: Evidence from Aceh Province

Abstract

This study investigates the simultaneous effects of the Human Development Index (HDI) and minimum wage on poverty and unemployment in Aceh Province. Using a quantitative approach with path analysis, the research aims to understand both the direct and indirect relationships among these variables. The results reveal that HDI has a significant negative effect on both unemployment and poverty, indicating that improvements in education, health, and income contribute to reducing socio-economic vulnerability. Minimum wage policy is found to have a dual impact: while it reduces poverty directly by increasing income, it also exerts a positive effect on unemployment, suggesting potential labor market rigidities. Furthermore, unemployment is shown to partially mediate the relationship between HDI and poverty. These findings highlight the importance of integrated development strategies that promote human capital investment while balancing wage policies with labor market dynamics. The study offers evidence-based insights for regional policymakers aiming to break the cycle of poverty and joblessness.