Digital Workforce Readiness in East Java: A Spatial Econometric Analysis using the General Nesting Spatial (GNS) Model, 2022–2024

Abstract

Regional disparities in digital infrastructure, labour-market characteristics, and socio-cultural environments create uneven digital workforce readiness across East Java. Understanding these disparities is essential for designing effective human-capital development strategies. This study examines the determinants of digital workforce readiness by analysing both local factors and spatial interactions between neighbouring regions. The analysis covers all districts and cities in East Java Province using regional data from 2022–2024. Workforce readiness is measured using the "Jobs" pillar of Indonesia's national digital readiness index (IMDI). The General Nesting Spatial (GNS) model is employed as the primary analytical approach to capture both direct effects and spatial spillovers of digital infrastructure, labour-market conditions, income, and cultural region characteristics. The results show that digital infrastructure is the most consistent local determinant, with positive and significant direct effects of 0.398 (2022), 0.366 (2023), and 0.108 (2024). Labor force participation shows a positive local effect of 0.327 in 2022, while its indirect spatial effect reaches −0.910, indicating regional competition for skilled labour. Open unemployment produces a significant negative indirect effect of −1.184 in 2024, reflecting unemployment contagion across neighbouring districts. Per capita income shows a positive local effect of 3.339 in 2024, while cultural differences, particularly in the Madura region, show significant direct effects of 11.450 (2023) and 9.200 (2024).These findings demonstrate that digital workforce readiness in East Java is shaped by both structural local conditions and spatial dependencies between regions. This study highlights the importance of spatial econometric modelling in understanding regional digital readiness and provides evidence-based insights for developing equitable and culturally adaptive digital labour policies.