The Lewis turning point is a situation in

economic development In the economics study of the public sector, economic and social development is the process by which the economic well-being and quality of life of a nation, region, local community, or an individual are improved according to targeted goals and ...

where surplus

rural In general, a rural area or a countryside is a geographic area that is located outside towns and cities. Typical rural areas have a low population density and small settlements. Agricultural areas and areas with forestry typically are descri ...

labor is fully absorbed into the manufacturing sector. This typically causes agricultural and unskilled industrial real wages to rise. The term is named after economist

W. Arthur Lewis Sir William Arthur Lewis (23 January 1915 – 15 June 1991) was a Saint Lucian economist and the James Madison Professor of Political Economy at Princeton University. Lewis was known for his contributions in the field of economic development. I ...

. Shortly after the Lewis point, an economy requires balanced growth policies. Typically, reaching the Lewis turning point causes an increase in the wage bill and the functional distribution favoring labor. However, in some cases such as in Japan from 1870 to 1920, agricultural labor productivity increased significantly and produced a labor surplus, dampening the rise in real wages. According to a study by Zhang and Yang, China reached the Lewis point in 2010; cheap labor in the country has rapidly decreased and real agricultural wages have substantially increased. Despite its large population, in the early 2010s China faced labor shortages, and real wages nearly doubled since 2003. Such rapid rise in wages for unskilled work is a key indicator of reaching the Lewis point. However, other journals such as the ''

China Economic Review ::''There is also an academic journal sharing the same name: China Economic Review (journal)'' ''China Economic Review'' (, Pinyin: Zhōngguó Jīngjì Pínglùn; also referred to as CER) is an English-language quarterly (formerly monthly) busine ...

'' claim that China has not reached the Lewis point, comparing the effect of the Lewis point in China to the Japanese experience. A 2013 working paper by the

International Monetary Fund The International Monetary Fund (IMF) is a major financial agency of the United Nations, and an international financial institution, headquartered in Washington, D.C., consisting of 190 countries. Its stated mission is "working to foster glo ...

predicts the Lewis point in China to "emerge between 2020 and 2025".

Lewis curve and automation

In their book,

Tshilidzi Marwala Tshilidzi Marwala (born 28 July 1971) is a South African artificial intelligence engineer, a computer scientist, a mechanical engineer and a university administrator. Early life and education Marwala was born at Duthuni Village in the Li ...

and Evan Hurwitz used Arthur Lewis' theory to understand the transition of the economy into the

Fourth Industrial Revolution The Fourth Industrial Revolution, 4IR, or Industry 4.0, conceptualizes rapid change to technology, industries, and societal patterns and processes in the 21st century due to increasing interconnectivity and smart automation. The term has bee ...

, where much of the production in the economy is automated by artificially intelligent machines. In this regard, they identified an equilibrium point, i.e. Lewis turning point, where automating human labor does not result in additional economic benefit.

References

Development economics Labour economics {{labor-econ-stub