Introduction

Abstract

The process of development over the last two to three centuries has been built on the movement of people out of subsistence agriculture into more productive jobs in labour-intensive manufacturing. As captured by the writings of Arthur Lewis, Simon Kuznets and other development economists, this transition resulted in an increase in wages and household incomes, and subsequently, helped lift people out of poverty. This was the case in Western Europe in the 18th and 19th centuries, and was fundamental for the success stories of the latter half of the 20th century such as the Republic of Korea, Taiwan, Malaysia and Thailand. Therefore, central to the process of development is the functioning of the labour market, namely, the ability for an economy to create more productive and better jobs for a large share of the population.