Human Capital Investment and Its Role in Encouraging Inclusivity in East Java

摘要

Currently, inclusive growth is a key issue in economic development. Inclusive growth encourages individuals to access education, health and other components that promote better living standards. In East Java, despite high economic growth, the income inequality level is also relatively high. Therefore, government intervention is needed to encourage the growth of higher quality, one of them through human capital investment. The objectives of this research are (i) to identify the relationship between human capital investment and economic growth and (ii) to analyze the impact of human capital investment on community welfare. The method of analysis used is simultaneous regression method. The findings show that human capital investment significantly affects economic growth. This means, human capital investment can be used as policy alternatives to encourage growth inclusivity in East Java. Simultaneously, the impact of social capital investment encourages the welfare of society through increased labor in the tertiary sector. The government needs to allocate human capital investment that encourages higher education and skills to compete in the labor market.