Economics · Development Economics
In Arthur Lewis's dual-sector model, why do wages in the modern capitalist sector initially remain constant at subsistence levels?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Capitalists collude to maintain a fixed wage pool
- 2The unlimited supply of surplus labour from agriculture removes upward pressure on industrial wages✓
- 3Government wage regulations cap industrial wages
- 4Trade unions prevent wages from rising above subsistence
Correct answer
The unlimited supply of surplus labour from agriculture removes upward pressure on industrial wages
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