The Doing Business Indicators: Measurement Issues And Political Implications

The debate on labor market institutions and how they affect employment and economic performance remains controversial. Since the 1980s, it has been argued that Europe's lackluster economic performance vis-à-vis the United States is due to its overly rigid labor markets. Similarly, the World Bank, in its 1995 World Development Report, Workers in an Integrating World, argued that developing countries would be better positioned to seize the benefits of globalization if they made their labor markets more flexible. But after decades of both theoretical and empirical research, academics have failed to reach consensus on the effect of labor regulations on economic and labor market outcomes. Part of the problem in the debate may be due to the lack of satisfactory indicators.