ABSTRACT
Post War development theory has been dominated by views that characterise developing nations as dual economies. This characterisation, arising from the classical model, depicts the economy as composed of two distinct sectors: a rural sector also known as the agricultural or traditional sector and an urban sector also known as the industrial or modern sector. The supply of labour is an important determinant of the evolution of an economy. Understanding the relationship between the supply of labour and income distribution is therefore important in understanding the development of an economy. The chapter examines what are the likely effects of the actual distribution of income on demographic change and the politics of adjustment. Migration from the traditional sector to the modern sector is induced by a wage premium that keeps industrial wages some small constant above traditional sector income. Both the Harris-Todaro and Lewis models suggest that the distribution of income in developing countries tends to favour the urban areas.
