Abstract

The rapid growth of e-commerce in Indonesia has played a significant role in the labor market. Business digitalization enhances efficiency, expands market access, and creates new economic opportunities. However, automation and shifting business patterns may reduce the demand for conventional labor, particularly for low-skilled workers, increasing the risk of unemployment. Consequently, the impact of e-commerce on unemployment remains a subject of debate—does it alleviate the issue or exacerbate labor market conditions? This study analyzes the causal relationship between the number of e-commerce businesses and the open unemployment rate in Indonesia from 2021 to 2023. Using the Granger causality test and panel data from 31 provinces, the findings reveal a bidirectional relationship between the two variables, where e-commerce influences unemployment, while unemployment also drives e-commerce growth as an alternative source of income. Aligned with Schumpeter’s Creative Destruction theory and Rogers’ Diffusion of Innovation, these results affirm that innovation can replace traditional sectors and reshape economic structures. Therefore, policies should focus on improving workforce skills to ensure that the benefits of e-commerce can be optimized inclusively.

Keywords: Technology, E-Commerce, Unemployment, Causality.