Factors That Influence Dependency Ratio In Sumatera Island

This study examines the impact of education level, life expectancy, and per capita income on the dependency ratio in Sumatra Island using panel data regression. The research utilizes cross-sectional data from 10 provinces over the period 2011–2020. The analysis involves selecting the best-fit model through Chow, Hausman, and Lagrange Multiplier tests, ultimately identifying the Random Effects Model (REM) as the most suitable. Hypothesis testing includes t-tests and F-tests to evaluate the significance of independent variables. Results indicate that education level and life expectancy negatively and significantly affect the dependency ratio, while per capita income has a positive and significant effect. The model explains 60% of the variation in the dependency ratio, highlighting the importance of improving education and workforce readiness to reduce dependency. This research contributes to understanding the demographic and economic factors influencing dependency ratios in the context of Sumatra Island.