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Tuesday, February 5, 2013

China’s declining labor pool

Interesting:

When an economy first becomes industrialized, it grows very fast by importing foreign technology and employing capital and plentiful, cheap labor mainly drawn from the agricultural sector. The migrant labor force accepts lower wages corresponding to the living standards prevalent in farming.

However, a point is reached when no more labor is forthcoming from the underdeveloped sector and wages begin to rise. This is known as the “Lewis Turning Point,” named after the late economist and 1979 Nobel laureate W. Arthur Lewis.

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