Abstract: The productivity level of labours in Micro and Small Industries (MSI), especially in leather craftsmen in Magetan regency, has increased significantly. Based on the results of research conducted through the use of panel analysis with the model equation using The Redundant Fixed Effect (RFE) and Hausman test, where the equation model for labour productivity comes from the ratio output formula for determinants that are still related and relevant to production. The results obtained by applying the Fixed Effect Model (FEM) method, show that the independent variable factors, such as capital per labour, number of labours, innovation, learning by doing, training, and the level of education in senior high school, are found to have an influence which is good at increasing productivity of labours. While at the junior high school level, it does not affect the productivity level of labours working in micro and small industries, leather craftsmen in the Magetan Regency.
Keywords: Labour Productivity, MSI, Panel Analysis, FEM, RFE, Hausman Test
Recieved: 22.11.2018 Accepted: 25.02.2019 UDC: 005.61