Labor market distortions and China's WTO accession package: an applied general equilibrium assessment

Gilbert, John, and Wahl, Thomas-Labor market distortions and China's WTO accession package: an applied general equilibrium assessment The economic implications of China's accession to the World Trade Organization have been analyzed using applied general equilibrium techniques. We explore the consequences of trade reform in the presence of labor market distortions. A formal model of imperfect labor mobility is incorporated into a large-scale, stochastic applied general equilibrium framework with which the consequences of China's trade reform for net welfare are considered. The simulations suggest that distortions in China's labor market, including imperfect labor mobility, rural-urban migration, dual urban markets and surplus rural labor, have significant effects on trade liberalization outcomes and in some cases produce unexpected second-best results. (C) 2003 Association for Comparative Economic Studies. Published by Elsevier Inc. All rights reserved.