Three key assumptions of the Lewis model of structural change are (1) there is surplus labour in agriculture initially, (2) informal and formal urban labour markets coexist, and (3) profits from the modern sector are reinvested only in that sector. (1) the wage equals the marginal product of labour in agriculture, (2) the labour market in the modern sector is competitive, and (3) the formal urban wage is institutionally determined. (1) there is surplus labour in agriculture initially, (2) the labour market in the modern sector is competitive, and (3) profits from the modern sector are reinvested only in that sector. (1) the wage equals the marginal product of labour in agriculture, (2) the labour market in the modern sector is competitive, and (3) profits in the modern sector are driven to zero by competition.

Three key assumptions of the Lewis model of structural change are (1) there is surplus labour in agriculture initially, (2) informal and formal urban labour markets coexist, and (3) profits from the modern sector are reinvested only in that sector. (1) the wage equals the marginal product of labour in agriculture, (2) the labour market in the modern sector is competitive, and (3) the formal urban wage is institutionally determined. (1) there is surplus labour in agriculture initially, (2) the labour market in the modern sector is competitive, and (3) profits from the modern sector are reinvested only in that sector. (1) the wage equals the marginal product of labour in agriculture, (2) the labour market in the modern sector is competitive, and (3) profits in the modern sector are driven to zero by competition.

ENGR.ECONOMIC ANALYSIS

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Chapter1: Making Economics Decisions

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