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One Troika fits all? Job crash, pro-market structural reform and austerity-driven therapy in Portugal

Author

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  • Diogo Martins

    (Universidade de Lisboa
    University of Coimbra)

  • Bruno Damásio

    (Universidade de Lisboa
    Universidade Nova de Lisboa)

Abstract

This article assesses the effectiveness of the labour market reforms implemented in Portugal as part of the Troika’s structural reform package. Using an ARDL-bounds test model to perform the econometric estimation, this investigation examines the long-run relationship between unemployment, capital accumulation and labour market variables for the 1985–2013 period. The econometric estimation suggests that capital accumulation has been the main driver of long-run unemployment, whilst labour market variables have played a minor explanatory role. These results suggest that Portuguese NAIRU is endogenous to capital accumulation and do not support the Troika’s emphasis on labor market reforms as a strategy to reduce long-term unemployment.

Suggested Citation

  • Diogo Martins & Bruno Damásio, 2020. "One Troika fits all? Job crash, pro-market structural reform and austerity-driven therapy in Portugal," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 47(3), pages 495-521, August.
  • Handle: RePEc:kap:empiri:v:47:y:2020:i:3:d:10.1007_s10663-019-09433-w
    DOI: 10.1007/s10663-019-09433-w
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    More about this item

    Keywords

    NAIRU; Unemployment; Capital accumulation; Labour market institutions; ARDL; Bounds test;
    All these keywords.

    JEL classification:

    • E11 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Marxian; Sraffian; Kaleckian
    • E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian; Modern Monetary Theory
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity

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