institutions (e.g., the lightly regulated Anglo-Saxon model and the Northern European flexicurity model). The impact of a rise in the minimum wage, for example, might be intrinsically different in countries with different labor market models. The existence of packages of regulations and institutions raises a legitimate question about whether the real policy-relevant task for researchers should be to study the impact of different models rather than individual features. Thus far, however, there has been very little serious empirical analysis of overall packages.<sup>2</sup> _Measurement issues_ stem from the fact that it is difficult to quantify many regulations. Measuring minimum wages is relatively straightforward, although this measurement can be complicated when countries have multiple minimum wages (by sub-national jurisdiction, industry, occupation, or age). In contrast, employment protection rules are less easily reduced to numerical values. Analysts have developed various EPL indices that have extended the possibilities for quantitative analysis. However, these are not without controversy regarding what they actually measure and how well they do so.<sup>3</sup> In any event, both EPL indices and minimum wages are problematic in a _de facto_ sense because they cannot easily incorporate enforcement or adjudication, which can be critical to capturing real effects of laws and policies (Bertola, Boeri, and Cazes 2000). This gap between law and practice is especially relevant in the case of developing countries with large informal sectors and limited administrative and judicial capacity. There are examples of studies that attempt to incorporate the application of regulations and policies into the analysis of the impacts of institutions (e.g., Boeri and Jimeno 2005; Micco and Pagés 2006; Almeida and Carneiro 2009). However, these studies are very few in number.

There are also a number of challenges related to the _structure and scope of models_ and the _interpretation_ of results. First, models tend not to accommodate the possibility that the impacts of regulations may be non-linear. It may well be that the effects of minimum wages or job security rules are different at the tails of the distribution (i.e., very high or protective or very low or unregulated) than they are around the mean. Second, models have tended to focus on short-run effects with less consideration of long-run implications. However, there is a growing body of evidence of persistence in labor market outcomes, which can be affected by regulations and other institutions. Third, much of the research concentrates on whether specific regulations have statistically significant effects on outcomes and does not consider the magnitude of the effect (i.e., paying attention to significance tests more than the size of the coefficient). The magnitude of the effect is clearly important for assessing trade-offs in making policy.

This literature review conducted for this paper considered the quality of the evidence presented in the various studies and how well the methodological challenges noted above were addressed. Studies that did not meet the conventionally held standards of sound empirical analysis, which were a valid measure of the policy variable and model specifications that control for other potential explanatory factors, were excluded. Both cross-country and single-country panel studies were included if they met these standards. It is fair to say that, on balance, the research community is more skeptical of cross-country analysis because of the endogeneity issue. However, given the importance of some of these studies (especially those conducted by the OECD), they were included in the review unless they had some evident methodological flaw. Evidence on developing countries largely comes from single-country panel studies. Although there are a few studies with special features to address some of the methodological challenges, 5