pp 1–27 | Cite as

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

  • Diogo MartinsEmail author
  • Bruno Damásio
Original Paper


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.


NAIRU Unemployment Capital accumulation Labour market institutions ARDL Bounds test 

JEL Classification

E11 E12 E15 E22 E24 



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Authors and Affiliations

  1. 1.ISEG (Lisbon School of Economics ad Management)Universidade de LisboaLisboaPortugal
  2. 2.Centre for Social StudiesUniversity of CoimbraCoimbraPortugal
  3. 3.ISEG (Lisbon School of Economics and Management), CEMAPREUniversidade de LisboaLisboaPortugal
  4. 4.NOVA Information Management School (NOVA IMS)Universidade Nova de LisboaLisboaPortugal

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