Financing the extension of social insurance to informal economy workers
The role of remittances
Informal employment, defined through the lack of employment-based social protection,
constitutes the bulk of employment in developing countries, and entails a level of
vulnerability to poverty and other risks that are borne by all who are dependent on
informal work income. Results from the Key Indicators of Informality based on Individuals
and their Households database (KIIbIH) show that a disproportionately large number
of middle‑class informal economy workers receive remittances. Such results confirm
that risk management strategies, such as migration, play a part in minimising the
potential risks of informal work for middle‑class informal households who may not
be eligible to social assistance. They further suggest that middle‑class informal
workers may have a solvent demand for social insurance so that, if informality-robust
social insurance schemes were made available to them, remittances could potentially
be channelled to finance the extension of social insurance to the informal economy.
Published on May 26, 2021Also available in: French
In series:OECD Development Centre Working Papersview more titles