Monday, January 6, 2014

Dual Sector Model

The dual- celestial sphere model given by Sir William Arthur Lewis master 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 evolution economy in terms of a labour transition amid 2 orbits, the capitalist argonna and the subsistence sphere of influence. Assumptions 1. The model assumes that a developing economy has a supernumerary of unproductive labor in the agricultural heavens. 2. These workers are attracted to the increment manufacturing sector where higher prosecute are offered. 3. It also assumes that the wages in the manufacturing sector are more or slight hardened. 4. Entrepreneurs in the manufacturing sector rent 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 an economy has locomote from a traditional to an industrialised 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 fruit per head of laborers who move from the subsistence sector to the capitalist sector to append.
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Since Lewis in his model considers overpopulated labor free economies he assumes that the bring let out of unskilled labor to the capitalist sector is unlimited. This gives rise to the possible action of creating new industries and expanding subsisting o nes at the existing wage rate. A broad port! ion of the unlimited supply of labor consists of those who are in disguised unemployment in factory farm and in illuminate over-manned occupations such as domestic operate casual jobs, fiddling retail trading. Lewis also accounts for two other factors that cause an increase in the supply of unskilled labor, they are women in the sign of the zodiac and population growth. The agricultural sector has a limited aggregate of land to...If you want to get a full essay, mold it on our website: BestEssayCheap.com

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