Sir Arthur Lewis’ 2 Sector Model
Like a see-saw
That moves in one
One direction
From the subsistence sector
To the capitalist sector
An unbalanced board
One end down the other up
Wages move from down to top
In the subsistence sector
Excess supply of labour
Low wages
Low average productivity
A labour intensive sector
No reproducible capital
Output per head is low
Marginal productivity is zero
Like the see-saw
That I will draw
The down-part of the unbalanced board
In the capitalist sector
The additional labour
High wages
High average productivity
Capital intensive sector
With reproducible capital
Output per head is high
Capital is used to live and apply
Like the see-saw
That I will draw
The up-part of the unbalanced board