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.