Dual Sector Model

The dual- celestial field of battle modelling given by Sir William Arthur Lewis success of the Nobel Memorial appreciate in Economics in 1979 is unremarkably known as the Lewis model, it is a model in developmental economics that explains the growth of a developing economy in terms of a labour party transition betwixt ii orbits, the capitalistic arena and the subsistence sphere of influence. Assumptions 1. The model assumes that a developing economy has a senseless of unproductive labor in the agricultural welkin. 2. These workers are attracted to the gain manufacturing domain where higher net are offered. 3. It also assumes that the struggle in the manufacturing field are more or keen resolute. 4. Entrepreneurs in the manufacturing sector study profit because they charge a price above the fixed wage rate. 5. The model assumes that these breadstuff will be reinvested in the business in the fashion of fixed capital. 6. An advanced manufacturing sector means an economy has conk step up from a traditional to an industrialized one. [1] Relationship between the deuce sectors The primary relationship between the both sectors is that when the capitalist sector expands, it extracts or draws labor from the subsistence sector. This causes the widening per head of laborers who move from the subsistence sector to the capitalist sector to cast up.

Since Lewis in his model considers overpopulated labor uninvolved economies he assumes that the bring out of uninformed labor to the capitalist sector is unlimited. This gives rise to the contingency of creating new industries and expanding subsisting ones at the quick wage rate. A hulking portion of the unlimited tot of labor consists of those who are in disguised unemployment in mill farm and in disassociate over-manned occupations such as domesticated operate casual jobs, minuscule retail trading. Lewis also accounts for two other factors that cause an increase in the supply of unskilled labor, they are women in the home and population growth. The agricultural sector has a limited essence of land to...If you want to construct a full essay, aver it on our website: Orderessay

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