Due to a ‘surplus’ of labour, MPLr is very low, with the modern sector consequently facing a perfectly elastic supply of labour. For reasons not specified in Lewis (1954), however, Wm is set exogenously well above the subsistence level Wr. Initially, as the modern sector invests, raising MPLm, its employment expands, e.g., from L1 to L2, absorbing labour from the traditional sector without raising Wr . Eventually, the absorption of labour in the modern sector reaches L3, the Lewis turning point, and incomes begin to rise above subsistence levels in the traditional sector.