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"Household and Poverty Effects from Russia's Accession to the WTO" by Tarr, David G., Thomas Rutherford and Oleksandr Shepotylo Abstract In this paper we employ a computable general equilibrium model of the Russian economy to assess the impact of accession to the World Trade Organization (WTO) on income distribution and the poor. We extend our earlier model that estimates the aggregate and sector effects in Russia with a representative consumer to a model that endogenously includes 55,098 Households as agents within the model. Thus, this paper is the first trade and poverty paper to incorporate a full, large household survey within the CGE model. We find that virtually all households gain from Russian WTO accession in the medium term, with average gains ranging from a minimum of a 2 percent increase in household income to 25 percent. We assess the bias from igoring feedback effects and data reconciliation in the typical "open loop" or two stage approach. We find the bias from feedback effects is very small, but the impact of data reconcialiation can be quite important for some households. We simulate Russian WTO accession in a constant returns to scale model that shows that the lack of virtually any losers in our model at the micro level is explained by the fact that we incorporate liberalization of foreign direct investment in services and endogenous productivity effects from trade liberalization. These elements have never been incorporated in poverty analysis before and they result in larger estimated gains for the average household. Thus, even households that are significantly below the average, still manage to gain. We estimate that the poor will gain slightly less than the wealthy because production will shift away form unskilled labor intensive sectors; consequently the wage rate of unskilled labor goes up less than the return to capital and the wage rate of skilled labor. We estimate an increase in government revenue from the growth deriving from WTO accession despite a loss in tariff revenue; if this government surplus is distributed in equal ruble amounts to all households, the poor will gain as much proportionately as the wealthier households. |
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Public Access  Household and Poverty Effects of Russian WTO Accession (694.8 KB) Replicated: 0 time(s)Restricted Access No documents have been attached. Special Instructions No instructions have been specified. |
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Last Modified: 9/15/2023 2:05:45 PM
