Adelaide Duarte

The Fundamentals of the Portuguese Crisis

This paper analyses the fundamentals of the Portuguese crisis. The financial crisis of 2007 worsened and triggered the current Portuguese crisis. We argue that the main problem that the economy is facing is its output stagnation due to a kind of Dutch disease that has created high and increasing levels of indebtedness, low and decreasing levels of saving and has reduced Portuguese competitiveness. Moreover, the existence of a dualist labour market and a new vague of emigration reproduces inefficiency increasing unemployment of younger workers and the supply of human capital abroad funded by the Portuguese taxpayers. Governance problems such as bad public budget governance, lack of transparency and accountability are also at stake and have to be solved to allow the economy to return to its long-run growth path.

Mind the Gap: education inequality at the regional level in Portugal, 1986-2005

Portugal stands as one of the most unequal countries in terms of income among the developed countries. Over the period 1980-2005, income inequality kept high, fostered mainly by a monotonic increase in earnings inequality. Given the close link between education and earnings, it is of major importance to study the distribution of education. This paper examines the distribution of education at the regional level in Portugal between 1986 and 2005. Our results indicate that education inequality decreased for the whole country as the average education level of the workforce rose, over the sample years. This finding does not apply at the regional level however, with several districts initially poor in terms of education exhibiting an increase in education inequality. The evidence also supports the existence of a Kuznets curve of education: as the average level of education rises, education inequality first increases, and, after reaching a peak at 5.13 years of schooling, starts declining.

A quantile regression analysis of growth and convergence in the EU: potential implications for Portugal

This paper applies a quantile regression approach to examine the growth and convergence process of fourteen EU member states over the period 1986-2009. From the results of the estimation of an accounting growth regression we conclude that an increase in the weight of the non-tradables sector and a loss of (price) competitiveness are especially harmful for growth for under-performing countries, while these benefit the most from physical capital accumulation and are less negatively affected by an increase in government consumption. Additionally, technological convergence is felt less strongly by low-growth member states. The variables retained are robustly related to growth at all quantiles, but the quantitative importance of the respective coefficients differs across quantiles in some cases. Given the changes in growth rhythms that Portugal recorded throughout the period under analysis, we derive some potential implications from these results for a better understanding of the Portuguese growth and convergence process after European integration. Our findings suggest that, given the growth deceleration that the Portuguese economy has been experiencing since the late 1990s, policies to enhance growth should pay more attention to promoting competitiveness and changing the specialization pattern away from the non-tradables sectors, as well as to increasing investment.

Earnings and education in Portugal, 1985-1991

Purpose - – The purpose of this paper is to examine the distributions of earnings and education in Portugal in the early years of European integration, 1985 and 1991, a period when Portugal experienced strong nominal convergence following EU accession. Design/methodology/approach - – The paper explores the information provided by relative distribution analysis and covariate (education) decomposition to study the dynamics of the earnings distribution since these methodologies allow for the identification of polarization patterns that might have occurred over the period. More standard methodological instruments are also used as a reference: cardinal measures of inequality and the Lorenz stochastic dominance approach. Findings - – The median and average earnings of employees increased and there was also a rise in earnings inequality. Relative to 1985, in 1991 there were more employees with very low earnings but also more 1991 employees with high earnings and there were also more employees at the bottom and top ends of the earnings distribution. The analysis of the relative earnings distribution by level of education reveals substantial differences for the top end of the distributions with the proportion of 1991 employees receiving the highest earnings higher than for the original 1985 cohort. A regional disaggregation confirms that the overall employees’ earnings and education distributions characteristics are determined by the behaviour of coastal regions, while in the non-coastal regions a lower level of inequality is associated with lower levels of median and average earnings and a different polarization pattern. Originality/value - – The paper shows that inequality is not a recent phenomenon in the Portuguese economy and thus might be one of the sources of the growth slowdown Portugal is experiencing since the turn of the century and might continue to hamper growth in the future deserving deeper investigation.

Differences in Human Capital and Openness to Trade as Barriers to Growth and Convergence in the EU

Growth in Southern European EU member states has been weak and is resulting in divergent growth paths relative to the richer EU countries. Convergence in terms of income levels requires more rapid growth in the economically weaker member states but it can succeed or fail depending on possessing necessary human capital and openness to trade levels, fundamental determinants of innovation and diffusion activities that drive productivity growth and thus long-run per capita income growth and convergence. We apply a thresholds regression approach to examine the growth and convergence process of 11 EU member states over the period 1960–2014 using human capital and openness to trade proxies as thresholds identification variables allowing us to determine specific policy implications for different human capital/trade regimes. Our findings confirm the existence of different regimes according to trade levels corresponding to different growth performances due to technological catch-up, external competitiveness, the weight of tradable goods, physical capital accumulation, government size and public debt.

On the Measurement of Regional Convergence in Inequality and Welfare

The present paper extends this analysis by applying it to the analysis of regional per capita income levels but also to that of within regions inequality and regional welfare levels. The empirical illustration uses Portuguese data on average earnings at the level of NUTS3.