Higher Education, Graduate Competency, Labor Absorption, and Regional Economic Growth: A Systematic Literature Review

Abstract

Higher education plays a strategic role in improving human capital quality, labor productivity, and regional economic growth. However, the relationship between graduate competency, labor absorption, and economic growth remains fragmented across previous studies. This study aims to systematically review the existing literature regarding the influence of higher education, graduate competency, employability, labor absorption, and regional productivity on regional economic growth. This study employed a Systematic Literature Review (SLR) approach using the PRISMA 2020 framework. Articles were collected from Scopus, Dimensions, and EBSCO databases using keywords related to higher education, employability, productivity, and economic development. The inclusion criteria consisted of peer-reviewed journal articles published between 2015 and 2025 in English. A total of 525 articles were initially identified, and after the screening and eligibility process, 20 articles met the final inclusion criteria. The findings indicate that higher education significantly contributes to economic growth through improving graduate competency, employability, labor absorption, and regional productivity. Human Capital Theory remains the dominant theoretical perspective used in the literature, while studies integrating Conservation of Resources (COR) Theory remain limited. Furthermore, most previous studies examined the variables partially and rarely integrated regional productivity as a mediating variable and education expenditure as a moderating variable. This review highlights the importance of integrated educational policies and labor market alignment to enhance sustainable regional economic growth. The study also provides a conceptual foundation for future empirical research in developing countries, particularly Indonesia.