Climate Change and Employment Dynamics in Developing Regions: Evidence From Java Island

Climate change poses not only environmental threats but also substantial socioeconomic impacts, including employment. This study investigates the influence of climate change on the open unemployment rate (TPT) in Java Island, Indonesia, from 2015 to 2024. Climate change is measured using annual average temperature and rainfall, while unemployment is represented by provincial-level TPT. Java Island was selected due to its central role in Indonesia’s economy, contributing the highest share of the national GDP. However, it paradoxically hosts three of the ten provinces with the highest unemployment rates—West Java, Banten, and DKI Jakarta—raising concerns about the inclusiveness of growth in the region. The study uses panel data from six provinces (Jakarta, Banten, West Java, Central Java, Yogyakarta, and East Java). It applies the Panel Autoregressive Distributed Lag (Panel ARDL) method to examine both short- and long-term dynamics. This method is particularly suitable because it captures temporal lags and accommodates regional heterogeneity. The novelty of this study lies in the application of Panel ARDL in the context of Indonesia’s regional labor market and climate interaction—an approach rarely used in prior research, which often focuses on national-level analyses or omits dynamic lag structures. By narrowing the focus to Java Island, this research also highlights subnational disparities often overlooked. This study contributes to the empirical literature on climate–labor linkages and supports the Sustainable Development Goals (SDGs), especially Goal 8 (Decent Work) and Goal 13 (Climate Action), by offering insights for climate-resilient employment policy.