Breaking Barriers to Sustainable and Decent Jobs: How Do Different Regulatory Areas Shape Informal Employment for Persons with Disabilities Under SDG 8?

Abstract

Breaking barriers to sustainable jobs and promoting inclusive employment are key goals of the 2030 Agenda, with SDG8 Target 8.5 aiming to achieve decent work for all, including persons with disabilities (PWDs). This paper contributes to the scholarly debate by empirically examining how various regulatory areas, including credit market regulation, labor market regulation, business regulation, and the freedom to compete, influence the informal employment of PWDs in 15 countries between 2007 and 2022. The empirical investigation is conducted for the entire population with disabilities, as well as for adults and youth with disabilities. The analysis employs a dynamic labor demand function estimated through the two-step system GMM method to account for adjustment costs within the labor market. In addition, the Feasible Generalized Least Squares method is employed to assess the robustness of the results. The findings reveal significant heterogeneity in the effects of regulation on the informal employment of PWDs, with substantial differences between adults and youth. At the aggregate level, greater flexibility in most regulatory areas reduces informal employment of PWDs, except for labor market regulation. Upon examining age cohorts, the outcomes for adults exhibit similarities to the aggregate analysis. In contrast, more flexible regulations increase informal employment among young people with disabilities, except for business regulations, which exert negative impacts, and credit market regulations, which demonstrate no significant effects. This study recommends that policymakers support formal business development for PWDs and implement anti-discrimination laws. For youth with disabilities, targeted initiatives, including financial inclusion and wage subsidies, are essential to convert regulatory flexibility into formal employment opportunities.