A Synthesis of the Lewis Development Model and Neoclassical Trade Models
No 46, Working Paper Series from Economics Discipline Group, UTS Business School, University of Technology, Sydney
A simplifed Lewis model with evidence-based assumptions treats all rural output as nontraded, and pays rural workers a convex combination of their average and marginal products. Lewis style transition is characterized as an increase in the weight on marginal product in the determination of the rural wage. This integration with standard trade models underscores the importance of trade for development, and predicts a real exchange rate appreciation for economies undergoing a Lewis style transition.
Keywords: Dual Economy; Lewis Model; Neoclassical trade models (search for similar items in EconPapers)
JEL-codes: F11 F31 F41 O13 O14 (search for similar items in EconPapers)
Pages: 37 pages
New Economics Papers: this item is included in nep-hpe and nep-int
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Persistent link: https://EconPapers.repec.org/RePEc:uts:ecowps:46
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