Nonparametric Regression with Local Polynomial Kernel on Relationship Between Schooling Years and Unemployment Rate in Banten

Abstract

The Open Unemployment Rate (TPT) is a key indicator in assessing the economic performance of Banten Province. One of the factors suspected to influence TPT is education, which is measured by the average years of schooling. This study aims to analyze the relationship between the average years of schooling and TPT using the Local Polynomial Kernel Nonparametric Regression method for the period 2017–2024. This method was chosen for its flexibility in modeling nonlinear relationships without requiring strict assumptions about the data. The optimal bandwidth parameter for smoothing was determined using the Direct Plug-In (DPI) method through the dpill function in the R software. The results show that the nonparametric model has a coefficient of determination (R²) of 0.2841, which is higher than that of the Ordinary Least Squares (OLS) linear regression model, which only reached 0.1710. This indicates that the nonparametric approach is better at capturing the complex relationship between education and unemployment. However, the low R² values in both models indicate the presence of other factors that influence the unemployment rate, such as economic conditions, labor market structure, and education policy. Therefore, increasing the average years of schooling alone may not be sufficient to significantly reduce the unemployment rate. More comprehensive policies are needed, such as job skill enhancement, vocational training, and economic strategies focused on job creation. The findings of this study are expected to provide useful insights for policymakers in formulating more effective strategies to address unemployment in Banten Province.