Introduction: For many orthodox economists, the never-ending Euro crisis that began in late 2007 confirmed
the wisdom of their long-standing crusade to transform the rules governing Southern European
labor markets. These arguments were embraced by the Troika formed by the European
Commission, the IMF and the European Central Bank, which declared poorly designed labor
market institutions to be among the most serious ailments afflicting Greece, Italy, Portugal and
Spain. The reluctance of political elites in these countries to challenge claims that the crisis was a
product of domestic institutional shortcomings and their unwillingness to consider Euro exit thus
pushed institutional reform to the top of the domestic political agenda
