Accelerating Job Search: The Influence of Internet Penetration on Reducing Youth Unemployment Duration in Indonesia

Abstract

We investigate the impact of internet penetration on the duration of youth unemployment in Indonesia from 2008 to 2018. Using a municipality-level panel dataset constructed from Sakernas, Susenas, and Podes, the analysis applies fixedeffects and instrumental variable models to address potential endogeneity. Results indicate that higher internet penetration is associated with shorter durations of youth unemployment. A 1-percentage-point increase in municipal internet penetration reduces average unemployment duration by 0.09 to 0.51 months, depending on the model used. The study also finds a modest but significant negative relationship between internet penetration and unemployment rates. Robustness checks using lagged controls and lead-lag specifications confirm the direction and strength of these effects. These findings confirm the role of digital infrastructure in reducing job search frictions and improving youth labor market efficiency. The development of the Indonesian Broadband Plan may be critical for enhancing youth employment outcomes.