An Extended Lewis Dual Economy Model and Its Application to China
Read
DownLoad |
| Title | An Extended Lewis Dual Economy Model and Its Application to China
|
| Author | Ye Zhenmao, Zou Yuxiang and Wang Xiaobing |
| Organization | Shanghai University of Finance and Economics; The University of Manchester |
| Email | yzm@mail.shufe.edu.cn ；yuxiang.zou@manchester.ac.uk；xiaobing.wang@manchester.ac.uk |
| Key Words | Economic Development; Dual Economy; Surplus Labor; Lewis Turning Point; China |
| Abstract | This paper reviews recent literature on Lewis' dual economy theory and uses it to explain several aspects of economic development in China. First, it examines the connection between long run per capita income and subsistence wages, and discusses two wage determination mechanisms in the modern sector. Second, it discusses the social security function of the agricultural sector, and argues that this function is an important means for insuring rural residents and rural-urban migrants against risks and uncertainties. Third, it distinguishes two types of urbanization and argues that urbanization without sufficient employment creation in the urban sector might have no economic benefit as it only involves surplus labor in the rural areas becoming urban surplus labor. Fourth, it defines two types of surplus labor, and distinguishes two different Lewis turning points. It argues that China has reached the first Lewis turning point, but is still far from reaching the second turning point, and this explains the coexistence of rising wages and surplus labor. |
| Serial Number | WP761 |
| Time | 2014-11-20 |
|