The Lewis Dual-Sector Model Flashcards
What are the two sectors in the Lewis Dual-Sector Model?
The traditional agricultural sector and the modern industrial sector.
How does the agricultural sector in the Lewis model differ from the industrial sector?
The agricultural sector has surplus labor and low productivity, while the industrial sector has higher wages and productivity.
What is surplus labor in the context of the Lewis model?
Workers in agriculture producing less than their potential output, allowing labor transfer without reducing agricultural output.
What drives labor migration from agriculture to industry in the Lewis model?
Higher wages and better employment opportunities in the industrial sector.
Explain the role of capital accumulation in the Lewis model.
Profits from the industrial sector are reinvested into expanding industries, driving further growth.
What is the “turning point” in the Lewis model?
The stage when surplus labor in agriculture is exhausted, requiring higher wages in the industrial sector.
List one assumption of the Lewis model about labor in agriculture.
There is a large surplus of labor in agriculture that can move to industry without reducing output.
How does the Lewis model explain wage differences between agriculture and industry?
Industrial wages are higher due to greater productivity and capital intensity.
What happens to agricultural output when surplus labor moves to industry?
It remains unchanged as long as surplus labor is not fully depleted.
What are the profits generated by the industrial sector used for in the Lewis model?
Reinvesting in capital-intensive industries to drive growth.
What is one major criticism of the Lewis model regarding urban employment?
It overlooks the potential for urban unemployment or underemployment in industrial sectors.
How does the Lewis model view the role of technological advancement in agriculture?
It assumes limited technological progress in agriculture, focusing instead on labor transfer.
Why is the assumption of unlimited surplus labor in agriculture criticized?
Agricultural workers often contribute more than assumed, and technological progress can increase their productivity.
How does the Lewis model view the reinvestment of industrial profits?
As essential for sustaining industrial growth and absorbing surplus agricultural labor.
In what way is the Lewis model limited in addressing modern economies?
It does not account for the growing role of the service sector and globalization in economic development.
