In recent years, labour laws, including those that regulate working conditions, have been subject to influential challenges, most prominently by the World Bank as part of its Doing Business agenda. This work has generated institutional indicators that are being used to contend that rigid regulation of employment conditions is to a large extent responsible for poor labour market performance in developing countries, such as low productivity and high unemployment and informal employment. There is therefore an urgent need not only to investigate these indicators and the claims that are being made for their policy implications, but also to evaluate the role of labour laws from a perspective that takes into account the policy rationales that underlie them. The focus of this paper is laws that regulate one of the central concerns in the globalized economy, hours of work. It investigates the quality of the existing working time indicators and suggests that they lack a proper consideration of the rationales of working time legislation, risk regarding any form of regulation as rigid, and contain no proper analysis or empirical evidence of the influence of the legislation on actual working time arrangements. In response to these concerns, the authors construct an effective regulation index (ERI), which captures both statutory hours limits and the extent to which they are observed, and shows that the relationship between working time regulation, income and the observance of legal measures is not clear-cut, and, especially in low-income countries, often very complex. The paper suggests that the allegedly negative employment effects of working time quot;rigidityquot; are questionable, since weekly hours limits, even when widely observed, do not appear to be impacting on economic growth; and contends that future research should focus on better understanding the conditions under which reasonable hours regulations can be maintained
