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The impact of financial sanctions on informal employment: Evidence from 129 countries

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  • Zu, Cuihua
  • Li, Weiwei
  • Long, Teng
  • Wu, Tianwei

Abstract

Using data from 129 countries (1995–2022), this paper investigates the impact of financial sanctions on informal employment. Results indicate that sanctions significantly expand the scale of informal employment, particularly for part-time and self-employed workers. The effect works through three channels: trade contraction, political instability, and exchange rate depreciation. Heterogeneity analyses reveal that the impact is intensified in countries with high sovereign debt risk and high economic complexity. This is attributed to financial fragility and rapid shock transmission across interconnected industries.

Suggested Citation

  • Zu, Cuihua & Li, Weiwei & Long, Teng & Wu, Tianwei, 2026. "The impact of financial sanctions on informal employment: Evidence from 129 countries," Finance Research Letters, Elsevier, vol. 102(C).
    • Handle: RePEc:eee:finlet:v:102:y:2026:i:c:s1544612326006045
    DOI: 10.1016/j.frl.2026.110075
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