Economic Vote in Portugal in the 21st century

Do Portuguese voters reward governments when they deliver better economic conditions? Most studies done before the turn of the century suggest they do. This paper revisits the subject by examining how local economic conditions influence the Portuguese governments’ legislative electoral fortunes.

Overall, the paper finds that the state of the local economy continues to play a key role in shaping voting, as higher unemployment in a region tends to hurt the government’s vote shares — a pattern consistent with past research and the idea of holding governments accountable for economic conditions.

Surprisingly, income growth appears to reduce support for the government, a result that differs profoundly from both past evidence and economic theory predictions. This evidence appears prominently in the second half of the first quarter of XXIst century. In addition, it is dominant in municipalities controlled by the party ruling at the national level.

Portugal was severely affected by the global financial crisis of 2008 and the subsequent eurozone debt crisis. By 2011, mounting public debt and budget deficits forced the country into a bailout from what became known as the “Troika” (IMF, ECB, and the European Commission). The immediate result was income plummeting, and the following years were marked by austerity measures that lingered throughout the decade.

During this period, income improvements were modest and far from restoring people’s previous purchasing power. Voters may have viewed those small income gains as breadcrumbs and blamed the government for them being so small. After all, the years were passing, and pre-crisis income levels were still not restored. Overall, the results suggest that a slow economic recovery –from a sudden and sharp reduction of purchasing power– does little to erase voters’ memory.

Click here to go to the paper by Rodrigo Martins and Mário Domingos.