Agriculture Reference
In-Depth Information
With these new values, the inter-regional factor and commodity flows
become more intensive. For example, in the closure of no control on the
trade balance, the price of migrant labour declines by 0.18 per cent when
the elasticities are higher while it increases by 0.18 per cent with the former
elasticities. Consequently, migrant labour supply increases by 1.47 per
cent (prevously the ncrease was only 0.25 per cent). The mgrant labour
supply increases in all regions, with the western region increasing the most
(1.98 per cent versus 0.31 per cent), followed by the central region (1.68
per cent versus 0.26 per cent) and the eastern region (0.83 per cent versus
0.20 per cent). Smlar changes can be observed n respect of nter-regonal
trade of commodtes. These results are understandable and do not need
more explanaton. It s more mportant to look at the welfare mplcatons.
The summary results are reported n Tables 6.6 and 6.7 whle the detaled
sectoral results are in Tables A6.9-A6.11.
It can be seen from the table that with the new values of parameters,
WTO accesson leads to hgher welfare gans. The total welfare gan ncreases
from 63.69 billion yuan in the closure with no control on the trade balance
and 48.04 billion yuan in the closure with no change of the trade balance to
69.04 and 56.79 billion yuan, respectively. Although there is still a worsening
of the regional income disparity, its magnitude is smaller when factor and
commodtes are allowed to move more freely. Every regon has a hgher
welfare gain than before, and the shares of inland regions in the total
gan ncrease from 12 per cent to 14 per cent. The ncrement n the rural
households' utlty and welfare after the WTO accesson s hgher wth the
revised elasticities than with former ones, while the increment in the urban
households' utility and welfare is now smaller—implying a smaller degree of
the rural-urban inequality.
Transfer payments
A counterfactual transfer payment program s also smulated usng the CERD
model. The program smply nvolves a 10 per cent ncrease n the central
government's transfer payments to the central and western regons. The
results are reported in Tables 6.8, 6.9 and A6.12-A6.14.
The simulation results do not give a clear justification for such a program.
Although the regional and rural-urban inequality improves slightly with
