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Concept of Unlimited Supplies of Labour in the Lewis Model
The concept of 'unlimited supplies of labour,' introduced in Arthur Lewis's influential essay, refers to a condition in a dual-sector economy before major industrialization. It posits that the traditional subsistence sector is so large that it can provide a nearly endless stream of workers to the expanding modern capitalist sector. This vast labor pool allows for industrial growth without a significant initial increase in wages.
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Concept of Unlimited Supplies of Labour in the Lewis Model
According to the dual-sector model of economic development, which of the following best describes the primary catalyst for the structural transformation of an economy from a traditional, subsistence-based system to a modern, industrial one?
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A dual-sector economy consists of a low-productivity traditional sector and a high-productivity modern sector. According to the model explaining this structural transformation, arrange the following events into the correct logical sequence that leads to overall economic growth.
A developing country is observed to have a large agricultural sector and a growing industrial sector. However, as industries expand and hire more workers from rural areas, industrial wages rise sharply from the very beginning of this process, and food prices increase significantly due to a shortage of agricultural labor. Which aspect of this scenario presents the most significant challenge to the foundational assumptions of the dual-sector model of economic development?
Productivity Growth in a Dual-Sector Economy
Match each key concept from the dual-sector model of economic development with its correct description.
According to the dual-sector model of economic development, the initial expansion of the modern industrial sector and its absorption of labor from the traditional agricultural sector is expected to cause an immediate and significant rise in industrial wages.
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