How do corporatist and liberal labour markets differ, and what does it mean for economic policy?

How do labour market institutions affect unemployment? Whereas some empirical studies find that mainly such institutions explain unemployment, others argue that this correlation is not robust. By means of a survey of the literature I provide evidence that one explanation
for these contradictory results is that labour market institutions affect unemployment differently within distinct labour market regimes. Because of institutional complementarities and a trade-off between external and internal flexibility, certain labour market institutions yield distinct impacts on unemployment within labour markets characterized by a high degree of corporatism, good labour relations, and high internal flexibility. Thus it is crucial for policymakers to take institutional complementarities into account when reforming the labour market.