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surveys discussed below, the ICA surveys indicatethat labour regulations appear to be of even morelimited relevance to low-income countriesIn contrast to the ICA surveys, the DBS is focusedon a detailed assessment of the regulatoryenvironment in individual economies. It hasan extensive labour regulation module, whichis based very closely on the methodology of theBotero et al (2004) study. 64 In addition, the DBSis the most recent, and indeed, possibly the mostwidely used measure of labour regulation andworker protection within an international context.Hence, despite some reservations expressedregarding the DBS, it continues to be a centralinformation base for policymakers and investorsalike. For this reason, our working group forChapter 3 of this report has made review of themethodology of the DBS and the debate on theDBS the basis for policy recommendations.The table above presents a snapshot of thekey measures available to the public user,from the dataset. We present the data by countryincome level. All measures are converted to anindex ranging between 0 and 100. Values closerto 100 indicate higher levels of rigidity or protection.The ‘difficulty-of-hiring’ index measuresrestrictions on part-time and temporary contracts,together with the wages of trainees relative toworker value-added. The rigidity of hours measuresthe various restrictions around weekend, Sundaypublic holiday work, as well as limits on overtime,and so on. The ‘firing’ index examines specificredundancy clauses within the relevant legislationin detail. What the DBS refers to as hiring costs,are in effect social protection costs, measuring allsocial security and health costs associated withhiring a worker. Finally, the cost of firing, measuresthe costs of terminating the employment ofan individual in terms of legislated notice-periodrequirements, severance pay, and so on.From the aggregate cross-country data, there isan interesting bifurcation in the regulation andprotection measures. Hence, the data indicatethat the highest measures for any area of regulationrelating to rigidity in hiring, firing and hoursof work are found in low income economies,with the lowest level of employment regulationamongst high income OECD economies. In addition,the data show that firing costs are also thehighest amongst low income countries, althoughnotably hiring costs are the highest in non-OECDhigh income economies.The Consequences of Labour Market RegulationThere are two important questions on policy issuesthat are of relevance to the debate aroundlabour regulation and worker protection. Thefirst revolves around the consequences of labourregulation, in all its different manifestations, foreconomic growth: do we find evidence that labourmarket regulation hinders economic growth? Thesecond issue is related, but more concerned withthe specific outcomes in the labour market, as aconsequence of this regulatory regime: does theevidence suggest for example, that higher levelsof labour regulation are correlated with higherrates of youth unemployment, larger informalemployment and so on?A number of studies suggest that regulationin general, and labour regulation in particular,is negatively and significantly associated withgrowth in per capita GDP (Loayza et al, 2006;Forteza and Rama, 2001; Heckman and Pagés,2003). On the other hand, Botero et al (2004)find that ‘There is no evidence that employmentlaws or collective relations laws vary with thelevel of economic development.’ 65 Loayza et alshow that the effect of regulation is graduallymitigated as governance — and thus regulatoryquality — improves.159