Path to achieving SDG 8: do worker remittances reduce vulnerable employment?

Abstract

Purpose

The prevalence of high levels of vulnerable employment in developing countries poses a formidable obstacle to their progress towards achieving SDG 8. While worker remittances (remittances) are widely recognised as a potential source of improving the welfare of people experiencing poverty, their effectiveness in alleviating vulnerable employment from a macro perspective remains unclear. Consequently, the study examines the impact of remittances on reducing vulnerable employment.

Design/methodology/approach

The study uses macro-level data from 73 developing countries covering 1990–2021. Vulnerable employment is measured in three forms: total, male, and female. Remittances are measured as a percentage of the gross domestic product. The findings are empirically analysed using dynamic panel data estimation techniques. A two-stage least squares (IV 2SLS) approach addresses remittance endogeneity.

Findings

Two key findings emerge from the study. First, increased remittances are associated with a decline in the total share of workers resorting to vulnerable employment, albeit a modest decline. Second, the remittance surge is associated with more males than females leaving vulnerable employment, indicating its gender-specific effects. These findings remain robust to several checks.

Practical implications

The study's findings underscore the potential of leveraging remittances to reduce vulnerable employment. To this end, selective and targeted policy interventions that promote financial literacy and inclusion, which serve as the cornerstones for effectively utilising remittances, are advised.

Originality/value

To the best of my knowledge, this study is the first to examine the impact of remittances on vulnerable employment on a macro scale. As such, the study makes a novel contribution to understanding how remittances serve as an enabler for SDG 8.

Citation

Yerrabati, S. (2024), "Path to achieving SDG 8: do worker remittances reduce vulnerable employment?", Journal of Economic Studies, Vol. ahead-of-print No. ahead-of-print. https://doi.org/10.1108/JES-11-2023-0674