Household Welfare Impacts of China's Accession to the World Trade Organization

The authors use China's national
household surveys for rural and urban areas to measure and
explain the welfare impacts of the changes in goods and
factor prices attributed to WTO accession. Price changes are
estimated separately using a general equilibrium model to
capture both direct and indirect effects of the initial
tariff changes. The welfare impacts are first-order
approximations based on a household model incorporating
own-production activities and are calibrated to the
household-level data imposing minimum aggregation. The
authors find negligible impacts on inequality and poverty in
the aggregate. However, diverse impacts emerge across
household types and regions associated with heterogeneity in
consumption behavior and income sources, with possible
implications for compensatory policy responses.