be protected against unemployment in various ways : either by strict regulations against layoffs, or through unemployment benefits, or a combination of both. the two are interrelated : in theory, employment protection legislation need not be very restrictive if an unemployed worker can rely on generous benefits, and vice versa. what does the empirical evidence tell us? generous protection of “ insiders ”, i. e. those who have a job, seems to have a negative impact on overall employment, since it affects the probability of employment of the “ outsiders ”, especially women, the young and the long - term unemployed. 3 the validity of this proposition is illustrated in chart 6 on the basis of the evidence from european countries. the lower job turnover and hiring also increases both the duration of unemployment and the proportion of long - term unemployed. the impact of employment protection legislation may be particularly adverse in industries that are subject to rapid technological change. in the context of increasing international economic integration, policies that constrain the reallocation of workers from uncompetitive industries to industries with a comparative advantage can adversely affect output and employment. to address the challenges of globalisation, institutions have to be in place to ensure that people are equipped with the right skills to safeguard their employability ( gordon 2004 ). these arguments do not imply that workers cannot be protected against unemployment in an efficient manner. an alternative approach is “ protect the worker, not the job ”. a less restrictive framework of employment protection would go hand in hand with better unemployment benefits. such a combination of labour market institutions is at the core of the danish so - called “ flexicurity ” model, which has recently received considerable attention. in denmark, job turnover is also relatively efficient, possibly as a result of relatively long notification periods which allow displaced workers to search for their next job in good time, aided by active labour market measures ( such a training, etc. ). as a result, the rate of long term unemployment is low. another pertinent point, supported by the empirical evidence, is that rigidities in labour markets and restrictive product market regulations are also closely connected. recent studies have shown a high correlation between employment protection legislation and restrictive product market regulations across oecd countries ( nicoletti and scarpetta ( 2005 ) ). this should not come as a surprise, since it is much easier to sustain a high level of employment protection in an industry if competitors are kept out of its market. therefore, amendments to employment protection legislation should

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