Question: Use the same starting point as in the previous question. Derive the demand for labor in the traditional and in the modern sectors. Show graphically

Use the same starting point as in the previous question. Derive the demand for labor in the traditional and in the modern sectors. Show graphically what the characteristics of the equilibrium would look like when no one wants to change sectors.

previous question.

Modify the Lewis model and assume that there is a strictly positive marginal product of labor in the traditional sector. Use figures with production functions in the traditional and the modern sectors to show what the equilibrium is when no one wants to move away from agriculture. What assumptions do you have to make about production functions to arrive at the conclusion that fewer people will end up in agriculture?

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The Lewis model also known as the dualsector model typically assumes that there is an unlimited supply of labor in the traditional agricultural sector with diminishing marginal returns to labor while ... View full answer

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