CONTENT PROTECTION, RESOURCE-ALLOCATION, AND VARIABLE LABOR SUPPLY

A three-sector general equilibrium model is used to study the implicat ions of an increase in content protection under the assumption of vari able labour supply (VLS). The role Of VLS is highlighted in the paper. An increase in domestic content requirements increases the equilibriu m labour supply, which magnifies the policy effects on the output leve ls (of agricultural, manufacturing, and intermediate goods) and the im ports of foreign intermediates. Furthermore, the policy change may inc rease the national income of the economy while the national welfare is decreased.