Question

In the Lewis Dual Sector Model, the “Lewis Turning Point” refers to:

Q: Answer-In the Lewis Dual Sector Model, the “Lewis Turning Point” refers to:

Before the turning point Labour supply to industry is perfectly elastic at the institutional wage no wage pressure. After the turning point Surplus labour is exhausted MPL in agriculture is now positive further industrial expansion requires higher wages industrial profits squeezed growth transitions to neoclassical labour-scarce mode. Note India context China crossed the Lewis Turning Point around 201012 rising manufacturing wages. India, with large agricultural surplus labour, has not yet reached this point.

A The point at which the agricultural sector achieves full mechanisation, making rural labour redundant

B The point at which the surplus labour in the traditional (agricultural) sector is fully absorbed into the modern (industrial) sector, after which further industrialisation requires real wage increases to attract labour

C The point at which the industrial sector’s profit rate falls to zero due to capital accumulation

D The point at which rural-urban migration reverses, as industrial wages fall below agricultural wages