Conditions of Work and Employment Series No. 50

Comparing indicators of labour market regulations across databases: A post scriptum to the employing workers debate

This paper offers a critical overview of labour market regulations' indicators developed by the World Economic Forum, the IMD, and the Fraser Institute. We show that the World Bank Employing Workers Index constitutes an important part of these indicators, despite its shortcomings and the recommendations made against using it either as part of aggregate indices or for ranking countries. We further document how these three databases compare, and identify both their common and specific limitations. We report that, for each of these indicators, the choice of components, of data sources, and of aggregation techniques result in different pictures of labour market flexibility. Our comparative exercise calls for continuous efforts to improve indicators of labour market regulations as well as a cautious use of such indicators for research and policy advice.