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The impact of trade liberalization on welfare of trade partners has been the subject of various economic studies, but components of welfare and their decomposition is considered by this study. The study of Huff and Hertel (2000) and the global trade analysis project constitute the theoretical basics of this research. First, by using the graphical approach, the distortion in labor market is investigated within a closed economy with two producing sectors. Than by using a mathematical approach, welfare effects will be decomposed using single and multi regions models. It is shown that various components affect welfare changes resulting from policy shocks. The effects of reduction in tariffs of imported agriculture commodities from Iran to WTO are examined. The results show that the Iran’s welfare rises because of positive contribution of allocative efficiency, terms of trade and tariff revenues. The changes in aggregate labor demand, investment and technology progress are the important elements in welfare changes due to trade policy, but in static models such as GTAP, these components are fixed, however the theoretical analysis shows that they may lead to welfare.       

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Measuring the welfare effects of energy subsidy reform is one of the most essential steps in determining the conditions and scenarios of energy price reform. Therefore, the main goal of this article is to survey how energy price reform affects the welfare of rural and urban households’ income deciles. This research uses the standard computable general equilibrium model based on legislated scenarios approved by Parliament in 2010. In addition, the supportive and income redistribution policies resulting from energy price reform are simulated and analyzed. The results show that rising energy prices leads to reduction in welfare of all urban and rural households especially in the lower income deciles. In addition, increasing energy prices causes more drop in the welfare of rural households in comparison with urban ones. Therefore, the supportive and income redistribution policies resulting from energy price reform under various redistribution scenarios considerably compensate the lost welfare of households.