Political parties are likely to hold differing views about employment protection legislation (EPL). While pro-welfare parties could support EPL, pro-market parties might focus on labour market deregulation. In this paper, we investigate empirically whether partisan politics, especially the government participation of Social democrats and Christian democrats, matter for EPL in 21 established OECD countries from 1985 to 2019. We show that during the golden age of the welfare state, the level of EPL was much higher where Social and Christian democrats dominated the government than elsewhere. After the golden age and under conditions of high unemployment, these unconditional effects mostly disappeared. Instead, the level of unemployment conditions partisan differences. Christian democrats liberalize EPL for regular employment significantly less than other parties under high levels of unemployment. In contrast, Social democrats defend high levels of EPL for regular and temporary employment when unemployment is low. Against expectations, they even liberalize employment protection for labour market insiders more than other parties at very high levels of unemployment.

Evaluation studies of active labour market policy show different activation measures generate contradictory results. In the present study, we argue that these contradictory results are due to the fact that the outcomes of activation measures depend on other institutions. The outcome measure in this study is the long-term unemployment rate. Two labour market institutions are of special interest in this context: namely, employment protection and unemployment benefits. Both institutions, depending on their design, may either increase or decrease the effectiveness of active labour market policies in lowering long-term unemployment. Based on an analysis of macro-level data on 20 countries over a period of 16 years, our results show that employment protection strictness and unemployment benefit generosity interact with the way in which active labour market policies relate to long-term unemployment. Our results also indicate that, depending on the measure used, active labour market policies fit either in a flexible or in a coordinated labour market. This suggests that active labour market policies can adhere to both institutional logics, which are encapsulated in different types of measures.