Does Sukuk Create Employment? Empirical Evidence from 18 Sukuk Issuing Countries

It is observed that Sukuk gives rise to economic growth; however, the role of Sukuk in reducing unemployment is still an unexplored area. Therefore, this study investigates the impact of Sukuk issuance on unemployment. For this purpose, the study relies on panel data from 18 Sukuk issuing counties. It employs the advanced panel technique, i.e., the Generalized Method of Moments (GMM), to avoid endogeneity, variable bias, and simultaneity issues. The study’s findings show that Sukuk issuance has a significant positive impact on job creation. For robustness, the data is also tested against Pooled OLS, Fixed, and Random effect models and found consistency in estimated coefficients. Thus, the study suggests that Sukuk can be used as a policy tool to reduce unemployment.