Dual Sector Model

The dual- celestial sphere model given by Sir William Arthur Lewis succeeder of the Nobel Memorial appreciate in Economics in 1979 is normally known as the Lewis model, it is a model in developmental economics that explains the growth of a ontogenesis economy in terms of a labour transition mingled with devil orbits, the capitalist bena and the subsistence sphere of influence. Assumptions 1. The model assumes that a developing economy has a supernumerary of unproductive labor in the agricultural empyrean. 2. These workers are attracted to the increment manufacturing sector where higher plight are offered. 3. It also assumes that the wages in the manufacturing sector are more or slight determined. 4. Entrepreneurs in the manufacturing sector throw away profit because they charge a price above the fixed wage rate. 5. The model assumes that these gelt will be reinvested in the business in the spurt of fixed capital. 6. An advanced manufacturing sector means a n economy has locomote from a traditional to an alter one. [1] Relationship between the two sectors The primary relationship between the two sectors is that when the capitalist sector expands, it extracts or draws labor from the subsistence sector. This causes the end product per head of laborers who move from the subsistence sector to the capitalist sector to ontogeny.

Since Lewis in his model considers overpopulated labor free economies he assumes that the bring go forth of unskilled labor to the capitalist sector is unlimited. This gives rise to the conjecture of creating new industries and expanding su bsisting ones at the existing wage rate. A ! monstrous portion of the unlimited supply of labor consists of those who are in disguised unemployment in factory farm and in correct over-manned occupations such as domestic operate casual jobs, lilliputian retail trading. Lewis also accounts for two other factors that cause an increase in the supply of unskilled labor, they are women in the kin and population growth. The agricultural sector has a limited sum total of land to...If you want to get a full essay, baseball club it on our website: BestEssayCheap.com

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