What is the Lewis Model?

-Assumes Excess Labour in the Agricultural Sector Exists, which thus means No Opportunity Cost exists if Agricultural Workers move to Industry to Abuse the Higher Wages offered there -The Industry Develops without reducing Agriculture Output. And as long as Excess Labour in Agriculture exists, the Wages in industry will not rise - there won't be Inflation occurring. -The Profits can be Reinvested to Capital Goods, leading to Higher Productivity -Reduction in Labour in Agriculture means agricultural productivity Improves as well! -Soon, an Equilibrium is Struck where Everyone is better off than they were, and Profits (Savings too) are Increased, allowing more Investment and Growth