A New Approach to Rural Labour Mobility in the Labour Surplus Economy: A Tripartite Labour Supply Model

Abstract

Labour surplus economy is a theory in the analysis of an economy, featuring mainly a large rural work force in excess of its capacity under a certain level of development and the allocation process of the so-called surplus labour force within its economic dualism. Therefore, its development model is often defined by the transfer of a large proportion of the labour force from agriculture to industry and services and from rural to urban settings. However, its sustainability will be questioned by the remaining scales of the rural pool of workers in the context of the diminished demographic dividend and impacts by the improvement of rural income. By exclusively focusing on theories of rural–urban migration, Lewis’ model was the seminal theory, followed by the Ranis–Fei labour surplus model, Jorgenson’s agricultural surplus model, and the Harris–Todaro dual economic model. As a result of the drawbacks of the traditional dualism of labour market division, a trichotomy approach is presented in this chapter. The tripartite labour supply model, a new approach, divides the labour market into three divisions and offers an alternative interpretation of the Lewis turning point. It also provides essential reasoning behind the wage growth of migrant workers, through unpacking the wage relationship to the emergence of class consciousness that results in class struggle and in turn impacts on wage determination, as a new perspective in the theory of Labour Surplus Economy.