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MENTAL MODEL · M3208

Lewis Turning Point

Lewis Turning Point
BusinessHigh supportDevelopment Economics
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Version 1.0.0 · Updated 2026-07-30

CORE DEFINITION

A turning point in the dual economy theory proposed by Arthur Lewis. When surplus rural labor is fully absorbed, labor shifts from surplus to shortage, wages begin to rise rapidly, and the economic growth model must shift from relying on labor input to relying on productivity improvement.

SCAFFOLDING EFFECT

psychology

Reduce cognitive load

Early warning of the end of the demographic dividend. It provides a framework for understanding the impact of demographic changes on economic development. In corporate strategy formulation, it helps predict the timing of rising labor costs, allowing for early deployment of automation, technological upgrades, or industrial relocation.

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Lewis dual economy model. In the early stages of development, there is unlimited surplus rural labor, so the modern sector can hire at low wages, keeping wages constant; when surplus labor is exhausted, labor becomes scarce, wages begin to rise, and the economy enters the "turning point." The mechanism is that the labor supply curve shifts from horizontal to upward-sloping.

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Source support: Explicit

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    en.wikipedia.orghttps://en.wikipedia.org/wiki/Lewis_turning_pointZH · Explicit
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