Carranza, ElianaSaliola, FedericaPackard, Truman2025-02-182025-02-182025-02-18https://hdl.handle.net/10986/42833This paper proposes a dynamic regulatory framework that adapts to the evolving structural transformation of economies across sectoral, spatial, occupational, and organizational dimensions. It highlights how well-designed and appropriately enforced labor and product market regulations (LMRs and PMRs) can enhance labor market outcomes, support job creation, and improve employment quality. A dynamic approach involves tailoring regulations to economic shifts, market failures, and administrative capacities, fostering structural transformation while addressing emerging challenges associated with service-led growth and digitalization. The paper advocates for a much greater investment in labor market observatories (LMOs) as tools to guide data-driven, agile regulatory responses akin to monetary policy adjustments. By integrating LMR and PMR, it outlines a path toward sustainable economic transformation, while discussing political economy challenges inherent in implementing dynamic regulatory frameworks.en-USCC BY-NC 3.0 IGODECENT WORKLABOR MARKET REGULATIONLABOR MARKET OUTCOMESJOB CREATIONLABOR MARKET OBSERVATORIESWorking Paper (Numbered Series)World Bank10.1596/42833https://doi.org/10.1596/42833