The third unreal assumption is the notion of a competitive modern-sector labor market that guarantees the continued existence of constant real urban wages up to the point where the supply of rural surplus labor is exhausted. prior to the 1980s, a striking feature of urban labor markets and wage determination in almost all developing countries was the tendency for these wages to rise substantially over time, both in absolute terms and relative to average rural incomes, even in the presence of rising levels of open modern-sector unemployment and low or zero marginal productivity in agriculture. Institutional factors such as union bargaining power, civil service wage scales, and multinational corporations’ hiring practices tend to negate competitive forces in LDC modern-sector labor markets.