Policymaking Gone Awry: The Labor Market Regulations of the Doing Business Indicators

Abstract

This article addresses conceptual and methodological issues as well as the policy implications of the "employing workers" component of the World Bank's Doing Business Indicators. It begins with a critical review of the "employing workers" indicators and their policy implication that no regulation is best for business (or the lowest the regulation, the better the business outcomes). This is followed by a methodological critique of the indicators that addresses problems of selection, coding, weighting, and ranking. The article argues that despite their role in influencing labor market reforms and policies, the "employing workers" indicators are not satisfactory indicators for formulating policy recommendations.