Arthur Lewis observed that the modern sector (also called the capitalist sector) is able to rake in profits helped by low labour costs because of unlimited supplies of labour from the agricultural sector.
The migrant labour force accepts low wages just around the living standards prevalent in farming.However, a point is reached when no more labour pours in from the underdeveloped, or agricultural, sector and wages begin to rise. This is known as the Lewis turning point.
In a case of the Lewisian turning point,the state of Kerala in India has 2.5 million migrant labourers from other parts of the sub continent. The state has apparently already turned the Lewis point. Labour costs are high . There is outward migration, mainly to the Gulf countries from among the youth of Kerala. The skilled labour have thus migrated and the unskilled influx from the Northern and Eastern parts of the sub continent make up the working labor force within the state. Given the inflow from emigrants, there is a perceived inclination for white collar jobs and a shirking of lower level jobs among Keralites. These are clearly signs of Lewis' point.
The immigrant labour are largely into construction rather than in to industry. Industries are virtually non existent as costs of labour prohibitive. Restrictive trade practices have smothered industrial growth and the state is afloat on Gulf received remittances.
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