Exploring the nexus of decent work, financial inclusion, and economic growth: A study aligned with SDG 8

Abstract

We investigate the potential influence of fair employment practices and financial inclusion on economic growth, focusing on aligning our analysis with the United Nations Sustainable Development Goal 8 (SDG 8). Our study encompasses various countries, including 26 low-income, 20 middle-income, and 15 high-income nations. Utilizing a dynamic fixed-effect panel data approach and employing the Generalized Method of Moments from 2010 to 2021, our findings reveal that conducive environments for decent work and enhanced access to digital financial services positively impact economic growth. This synergistic effect of SDG 8 components is particularly pronounced in high-income countries, suggesting the potential for accelerated economic growth rates. Conversely, our analysis finds no discernible impact on the economic growth of low-income countries. For middle-income countries, nuanced coefficient outcomes provide a more intricate understanding of their economic dynamics. Through extensive impulse-response analysis using a Panel Vector Autoregression model, we illustrate the distinct effects of shocks related to decent work and financial inclusion across various income categories. Our results are robust to multiple sensitivity tests, underscoring their reliability and signaling significant policy implications for acknowledging the critical role of decent work and financial inclusion in fostering economic growth.